Oil is one of the great importance resources for the Malaysian and Indonesian economies. Its extremely difficult to view these two countries economic development without their oil resources from it. The oil industry also has made substantial contribution in the infrastructural development to the countries. In December 2005, Asia's oil -guzzling economies are bracing for clower economic growth , soaring inflation and rising interest rates. Even Malaysia as a net oil exporter , believes it should also take an appropriate action in order to ensure the increase in oil price will bring a positive impact to the economy. As so as for indonesia which has recently become a net oil importer as a result of dwindling production and rising consumption. If both of these countries do not conserve this situation , the will reach to the poitn where the countries oil bill is threatening the foreign exchange reserves. This study will examine the consequences of hike in oil price to Malaysian and Indonesian economy through analyzing the microeconomic impact as well as the impact to the overall economy system. The study will also look into related factors such as the causes of price increase and the actions had been taken by the government to overcome this problem.