Most of the research on environmental issues have focussed on technical solutions and very few have focussed on the relationship between the state and businesses. The recent fires, haze and oil spills in Southeast Asia have drawn our attention to the need to examine the linkages between governments and businesses. This paper attempts to provide such an analysis via an examination of the timber industry in Malaysia. It argues that an understanding the current ecological crisis needs to be grounded in the unravelling of the dynamics and contradictions inherent within the political economy of the industry in Malaysia.