Visiting Prime Minister Goh Chok Tong said Asean had fallen off the economic radar of countries like the United States and Japan, and the region could do without this new threat to its security.

``The first thing we should do is show the world we are on top of the situation, that we are working together to overcome the terrorist threat to security,'' he said.

``So my message to Prime Minister Thaksin Shinawatra was on a bilateral basis and on a collective Asean basis. We must be seen by the world to be working together to overcome the impact of terrorist activities in Asean.''

Since the attacks in New York and Washington foreign investors have become wary of the region. Indonesia is suffering from ethnic and religious strife. The Philippines is tackling Muslim insurrection and Singapore and Malaysia arrested suspected Muslim militants.

Thailand and Singapore yesterday agreed to co-operate further in the drive against terrorism by exchanging intelligence and information.

But Asean members need to do more, the Singapore leader said. Apart from arresting suspected terrorists and uprooting their network and cells, it was perhaps time for Asean countries to set up a special unit to deal with terrorism.

Mr Goh said combating foreign perceptions of Asean as a sanctuary for terrorist activities was not easy, as the Sept 11 attacks had provoked illogical fear of Muslims and Islam.

Singapore had tried to manage these fears. The government's message to Singaporeans, nearly 80 percent ethnic Chinese with Malays and Indians in the minority, was that the attacks were not the work of Muslims or Islam, but of a small group of deviants. Moderate Muslims in Singapore were also being urged to speak against terrorism.

Despite these efforts Mr Goh admitted Singapore had a national cohesion problem resulting from the Sept 11 attacks.

The latest controversy was the government's decision to prohibit Muslim girls from wearing their traditional head dress, or tudung, at government schools.

Mr Goh said he was not certain how the controversy would pan out, but was adamant: ``We are not going to budge. We have made a [policy] decision. Changing now could cause segregation.''

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