Malaysia deforested 6.3 million hectares since independence; 91% of which occurred before Malaysia pledged, at the Earth Summit in 1992, to maintain a minimum 50% of its terrestrial area under forest cover. However, under economic and population pressure, Sarawak—the largest contributing state to the country’s current forest cover of 54.8%—shows continuing deforestation even after 1992. This paper reviews land use policies underpinned by economic development and environmental protection considerations, land rights issues that complicate land use planning, and legislation that regulates land use change. The objective is to investigate the adequacy of existing policies and legislation in governing forest cover in Sarawak and to recommend improvement measures. If the Sarawak Land Use Policy that allocates seven million hectares for forest is realized, Malaysia’s forest cover would drop to 53%, assuming other states maintain their forests. It is recommended that legislation governing the designation of permanent forest and conversion of forest for other land use to be strengthened, civil society to be enlisted to enhance knowledge level, and carbon credit production to be promoted as alternative land use that keeps forests standing. With these measures, it is hopeful that Malaysia’s aspirations regarding forest cover can be achieved.

Carbon pricing is widely recognized as an effective policy instrument for climate change mitigation. Carbon pricing have been imposed in 39 developed countries and eight middle-income countries. Eight more middle-income countries are considering its implementation. As experiences from industrialized countries may not be relevant to developing countries, this literature review fills a knowledge gap by collating the impacts of carbon pricing in developing economies to facilitate cross-learning. Some developing countries still have distortionary subsidies in place, while others are going through environmental fiscal reforms to nudge their societies and economies towards greenhouse gases emission reduction. Various studies demonstrated that safeguards introduced with carbon pricing could help firms to transition while maintaining the motivation to innovate to stay competitive. At the household level, given different energy consumption patterns, carbon pricing in developing economies is not necessarily regressive, especially for rural population. Aggregate impacts to employment rate and gross domestic product change over time as the economy restructures towards decarbonization. A well-designed carbon pricing policy package with revenue recycling mechanisms tailored to the socioeconomic circumstances of the country could achieve multiple dividends of economic growth, increased employment, improved equality, national debt reduction or accomplishment of other sustainable development goals.