Poverty, over-population, shifiting cultivation, extensive farming and overgrazing, industrialization, uncontrolled logging, seasonal bushfires and the lack of funds and management technology are the main causes of tropical forest degradation. The impacts on the environment include ecological damage like soil degradation, impairment of water retention capacity of forest soils, the loss of bio-diversity, and climatic damage such as regional climatic changes, the increase in atmospheric carbon and global warming. The other indirect impacts deal with socio-economic problems such as the loss of income, and the unbalanced economic development of rual and urban areas. The experience of Sabah, Malaysia in the rehabilitation of the natural forests and wastelands is briefly outlined. There is an urgent need for coordinated planning at the forest sector and management levels, and for developing and applying appropriate forest managemant techniques to these if we ever hope to sustain their productive, protective and recreational functions.