JAKARTA, Jan 14 (Reuters) - Indonesia's President Joko Widodo has set up an agency to restore about 2 million hectares (5 million acres) of carbon-rich peatland damaged by fires that sent smoke across the region last year angering neighbouring countries.
The region suffers every dry season from so-called haze caused by smouldering fires, often set deliberately to clear land for palm oil plantations on Sumatra and Borneo islands.
"I have tasked this agency with creating and implementing an action plan so that we can convince the world that we are very serious about overcoming the damage caused to forests and peatlands," Widodo told reporters late on Wednesday.
The agency will work until 2020 in seven provinces on Sumatra, Kalimantan, and Papua islands.
The fires and pollution were particularly bad last year because of dry weather caused by the El Nino weather phenomenon with smoke blanketing neighbouring Singapore and Malaysia for weeks and drifting as far north as the Thai capital, Bangkok.
The fires cost Indonesia $16 billion, according to the government.
Efforts by Indonesia and neighbouring countries to prevent the fires, and put them out after they start, have shown little success. The fires last year only ended when the rainy season arrived.
A $565 million lawsuit brought by Indonesia against a pulp and paper company was rejected by a court last month, dealing a blow to government efforts to punish those who set the fires to clear land.
The Southeast Asian nation is the world's fifth-largest emitter of greenhouse gases.
(Reporting by Jakarta bureau; Writing by Kanupriya Kapoor; Editing by Robert Birsel)