'Asean member countries are horrified by such a high oil price,' Mr Ong told Bloomberg in Jakarta on Tuesday. If the oil price stays above US$60 a barrel 'there will be a net negative impact on Asean'.

Higher oil prices are having a greater impact on the region's developing nations such as Indonesia, Thailand and the Philippines as transport costs account for a larger proportion of consumer spending than in more industrialised economies.

With crude oil trading above US$60 a barrel, regional growth may be cut by between one and 1.5 percentage points to as low as 4.5 per cent this year, Mr Ong said. 'It will be a rough ride,' Mr Ong said. 'Our growth will go down and we will have less prosperity.' Mr Ong said higher oil prices are leading to bigger fuel subsidy bills for some of Asean's biggest economies. 'You can see it affecting Indonesia already, which was a net exporter and is now a net importer of oil,' he said. 'You can see it in Thailand where the prime minister is worried about growth.'

Indonesia grew at a slower pace for a second straight quarter in the three months ended June as rising fuel prices and higher interest rates curbed spending. Gross domestic product rose 5.5 per cent in the second quarter from a year earlier, after expanding a revised 6.2 per cent in the first, the government said this week.

Thailand's economy expanded less than 4 per cent in the second quarter, central bank governor Pridiyathorn Devakula said on Tuesday. The Bank of Thailand last month cut its 2005 growth forecast to as little as 3.5 per cent, from 6.1 per cent last year, amid higher fuel prices.

The International Monetary Fund expects the Philippine economy will grow 4.75 per cent this year, less than the government's 5.3 per cent forecast.

Indonesian President Susilo Bambang Yudhoyono on Aug 16 almost doubled the government's fuel-subsidy forecast for this year to as much as 140 trillion rupiah (S$23.4 billion) because of rising crude oil prices.

Thailand's government began winding back diesel subsidies on June 1 and on July 13 scrapped the remaining fuel price support, ending 18 months of efforts to protect the economy from rising oil prices that had cost the country 92.1 billion baht (S$3.7 billion) since January 2004.

Mr Ong said Asean members need to find alternative sources of energy, while conserving energy resources by encouraging people to use public transport instead of private vehicles.- Bloomberg