Forestry is an important sector in Malaysia. The long term development of the forestry sector will definitely affect the future amounts of carbon sequestration and emission of the country. This paper evaluates various forestry economic options that contribute to the reduction of carbon dioxide in the atmosphere. The analysis shows that, although forest plantation could sequester the highest amount of carbon per unit area, natural forests which are managed for sustainable timber production are the cheapest option for per-unit area carbon sequestrated. In evaluating forest options to address the issues of carbon sequestration and emission, the paper proposes that it should be assessed as an integral part of overall long term forestry development of the country which takes into account the future demands for forestry goods and services, financial resources, technology and human resource development.