* Indonesia blames eight companies for fires
* Indonesian health services record higher incidence of asthma, skin problems
* New record pollution levels in Singapore
By Kanupriya Kapoor and Michael Taylor
JAKARTA, June 21 (Reuters) - Indonesia deployed military planes to fight raging forest fires on Friday that blanketed neighbouring Singapore in record levels of hazardous smog for a third straight day in one of Southeast Asia's worst air-pollution crises.
As Singaporeans donned face masks and pulled children from playgrounds and Malaysia closed schools in the south, the deliberately-lit fires grew bigger in some areas. Whipped up by winds, the blazes added to fears over health problems and diplomatic tension in Singapore, Malaysia and Indonesia, three of Southeast Asia's biggest economies.
"The winds are picking up and the weather isn't very good at the moment, so the fires in some places are getting bigger," Gunawan, a firefighter who like many Indonesians go by one name, said by telephone. "We are working as hard as possible to control the fires ... but we're facing difficult conditions."
Indonesia's government blamed eight companies, including Jakarta-based PT Sinar Mas Agro Resources and Technology (SMART) and Asia Pacific Resources International (APRIL), for the fires.
The environment ministry is expected to name the rest of the firms on Saturday.
"The majority of hotspots in Riau (province) are inside APRIL and Sinar Mas concessions," senior presidential aide Kuntoro Mangkusubroto told Reuters.
An APRIL statement said the company and third-party suppliers had a "strict no-burn policy" for all concessions in Indonesia.
A spokeswoman for Golden Agri Resources, SMART's Singapore-listed parent, said the company knew of no hotspots on its concessions.
"Given the current situation, we have intensified our fire surveillance patrols with sufficient firefighting equipment," she said. "If illegal fires are started near our estates we will take prompt action to put them out and report to the local authorities."
Illegal burning on Indonesia's Sumatra island typically take place in the June to September dry season to clear space for palm oil plantations. But this year's fires are unusually widespread and the haze is the worst in Singapore's history.
Singapore's government has warned it could last weeks.
Indonesia has earmarked around 200 billion rupiah ($20 million) to handle the disaster. Seven military aircraft were deployed for water bombings and rain seeding.
Hospitals in Dumai and Bengkalis in Indonesia's Riau province recorded increases in cases of asthma, lung, eye and skin problems, said health official Arifin Zainal.
The Dumai airport remained closed for a third day.
In Singapore, the number of residents wearing face masks rose markedly as the pollution standards index (PSI) climbed to a new record of 401 at midday, a level which health authorities consider potentially life-threatening for the elderly. The PSI moderated later to an "unhealthy" 142 by mid-evening.
"Basically, what a 'hazardous' PSI level means is that the pollution will cause damage to the lining of the breathing tube," said Dr Kenneth Chan, consultant respiratory physician at Singapore's Gleneagles Medical Centre. "If the lining of the breathing tube is damaged, it will make the patient more vulnerable to various infections."
In Malaysia, southern Johor state was the worst affected, with pollution readings remaining in the "hazardous" category.
Air pollution has long been a serious problem in many Asian cities such as New Delhi, Beijing and Hong Kong but it is only an issue in Singapore when the smoke blows in from Sumatra.
Accoring to one method of measuring pollution, the one authorities use in China's capital, Singapore's air was much worse than Beijing's on Friday, according to state agency data.
China gauges pollution by measuring particle matter 2.5 micrometers (PM2.5) in diameter. Beijing's highest concentration of PM2.5 over the 24 hours to around noon on Friday was 116 microgram per cubic metre. The highest concentration in Singapore was 278 microgram per cubic metre.
The cost of the current haze for Singapore could be hundreds of millions of dollars, brokerage CLSA said in a report.
It said that in 2006, when the pollution index reached 150, it was estimated the haze cost $50 million and in 1997 it was $300 million. CLSA said the 1997 and 2006 figures seemed low when considering the direct and indirect cost of prolonged haze.
Workers in Singapore could still be seen toiling at some construction sites despite the elevated levels. The Singapore government has so far only issued only broad guidelines about employers having to ensure the health and safety of workers.
"Even as our government rails against the corporate interests in Sumatra who are willing to sacrifice human health for profits, the Ministry of Manpower still isn't practicing what they preach by allowing construction companies in Singapore to make their workers slog through the smog," the Online Citizen, a socio-political website, said in a commentary.