"Do you want to try it?" Wayan Sudiarta taunts, offering a muddy water bottle full of liquid he's just poured from a rusty tin drum in his backyard.

He says this is the good stuff - one of the first bottles from the day's production of arak and the one which yields the highest alcohol content and therefore the highest price.

In the hills of Karangasem, about two hours east of Denpasar, this is top shelf.

"Arak is mabu (medicine)," says Nyoman, one of Wayan's two wives.

"It is good for the heart."

The brew - distilled from the sap of palm flowers - tastes like petrol and burns its way violently down the throat.

Nyoman laughs hysterically.

About 80 per cent of the arak sold in Denpasar and mixed in famous "Arak Attacks" along Bali's tourists strip has its unlikely origin here - at least in its purest form - in the muddy backyards of a string of villages on the island's east.

In Wayan's village of Sidemen, every home has an arak distillery dripping out hundreds of litres a day in the decentralised, makeshift and lucrative industry that is Balinese moonshine.

On an average day, he will sell 30 containers to men who come from the city for 200,000 rupiah ($19.50).

On a good day, usually in the dry season, he will make 250,000 ($24).

But what he can't explain is what happens once the arak leaves his village or why the same 500ml bottle of arak he sells from his backyard for 30,000 rupiah then sells on Bali's tourist strip for up to 30 per cent less.

"The financial situation makes people creative but in the wrong way," said Ika, a Denpasar local outside a small shop in Legian, where some of the arak ends up.

"To make money, you have to mix it with something. Water makes it taste less strong so you put something else in it . . . something cheap to keep it strong.

"It happens with everything here in Bali. White snapper is cheap so you put red colouring on it and it becomes red snapper, which you can sell for more.

"Because we are poor, we have to be creative."

Next to the bustling Legian shop, which serves a constant stream of tourists, the owner and a group of men from Karangasem proudly boast they have the strongest arak on Bali.

To prove it, they grab a wooden chair and a piece of wood, soak both in arak and attempt to set them on fire.

"See, this is the best arak," the shopkeeper cries as flames sputter briefly.

He sells the arak in his shop - the weak batches on the shelves and the strong stuff under the counter to backpackers and surfers who see arak (the stronger the better) as a Balinese rite of passage.

Inexplicably, the bottles are also cheaper here than in Karangasem.

Is it pure? Of course, he says.

The growing and potentially deadly problem of drink spiking in Bali is rooted in this false black market economy.

Beginning in the hills of Karangasem, everyone in the moonshine chain is after a profit.

After the distillers come the middlemen from Denpasar who visit the villages every afternoon and haggle down the price.

Corrupt police regularly stop cars carrying the bottles to either confiscate the arak or demand a bribe to turn a blind eye to the trade.

Last in the chain are the store owners who dilute and sell it.

At first, the practice of spiking arak was restricted to locals, who equated a drink's potency with their prowess.

"If you have high resistance to arak then you are strong," Ika says.

But two years ago, the Indonesian Government raised the excise tax on alcoholic drinks by between 100 and 214 per cent, depending on their alcohol content.

Arak suddenly became a cheap and often unwelcome substitute to keep bar prices down and their profits up.

It is an open secret that many bars across Bali now secretly use arak in drinks and cocktails instead of spirits such as vodka.

If the substitute used is one which has been watered down and laced with a substance like methanol to maintain its potency, the results can be deadly.

Dr Agus Somia, head of infectious diseases at Bali's Sanglah Hospital, says he regularly treats people for poisoning, more often than headlines focusing on foreign tourists would suggest.

Two years ago, 25 Bali locals died from a deadly home concoction that police said contained methanol.

A few months later 22 people died and 300 others were poisoned after drinking bootleg liquor laced with methanol in Central Java.

In two weeks in 2009, at least four foreigners were among 25 people who died from methanol poisoning on Bali and nearby Lombok and more than 50 others needed hospital treatment.

Four months ago, 45 villagers from Kintamani were admitted to Sanglah with severe poisoning. Three died. Less than a week later, another two died in Denpasar.

Sometimes it is methanol, sometimes ethanol, sometimes it is mosquito repellent - anything a seller thinks he can use to water down arak cheaply but still give it its kick. The result is often permanent blindness and occasionally death.

"It is really easy to buy drugs or chemicals in Indonesia," Dr Somia said. "Everyone can buy methanol, formaldehyde or anything.

"I never have to show a prescription when I go to the pharmacy."

Methanol is one of the most deadly substitutes used.

Known locally as spiritus and used by Balinese in rural areas to light pump lanterns, it is also one of the easiest to get.

The West Australian

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