Indonesia’s total area of forest and waters is around 130.68 million hectares, but it consistently decreases yearly. The illegal land clearing for agricultural activity is considered as the main cause of the forest reduction, as around 5.6 million hectares of land burned between 2015 and 201 and it costs of hundreds of trillions to the country. In order to lessen the negative impacts of land clearing, Indonesian government indeed has started to promote a green economy campaign, known as sustainable development with an environmental perspective. This study aims to examine the relationship between illegal land clearing and its effect on the Indonesian economy and its relationship with the green economy campaign initiated by the Indonesian government. We use the data from the Indonesian Ministry of Environment and Forestry, Central Bureau of Statistics, Greenpeace Indonesia, and World Bank to analyze this issue. We find that the governments’ poor regulation and monitoring have caused forest and land fires almost every year and it has huge economic and environmental costs that should be paid by the government. Therefore, a strong law enforcement is needed so that the green economy campaign in Indonesia can be executed properly.