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The demand for unprocessed logs from Asian markets is the greatest cause of forest loss in Papua New Guinea. Papua New Guinea is the world's fifth largest producer of tropical logs (PNG Resources First Quarter 1997 ). Most of the world's tropical logs are processed domestically by the producing countries, not so with Papua New Guinea. Subject to Indonesia's re-entry into the round log market, behind Malaysia, Papua New Guinea has been the world's second largest exporter of tropical raw logs (Light, 1997). Japan has been the largest importer of Papua New Guinea's logs, with South Korea being the second largest import market (AusAid, 1997). Other significant importers of tropical raw logs from Papua New Guinea have in the past been Malaysia, Philippines, China, Hong Kong and India.

The end of 1997 and the beginning of 1998 saw the effects of the downturn in the Japanese economy and the devaluation of South East Asian currencies on the Papua New Guinean log market. By the end of the first quarter in 1998 the Japanese log market had fallen away. Overall Papua New Guinean log export volumes had fallen by 40%, and prices were down 58% ( The Independent June 26, 1998). The Government of Papua New Guinea sought to prop-up loggers by reducing the log export tax on logs priced less than K135 per cubic metre (The National July 30, 1998)