Lisa, 6, and Risa, 7, are forced to beg on the streets of Kuta. Credit:Michael Bachelard "We know from our inquiries with the Indonesian police that he has a relationship with people here who have relationships with young children: family members," Sheehan told Fairfax Media in his Jakarta office. "We suspect he's arranged for pay-per-view, and likes the child, so he comes to Indonesia to access the child." If Malcolm is doing this, he's joining a large and growing cohort of Australian paedophiles seeking their guilty pleasure in the poor villages and towns of their northern neighbour. It may surprise many but Indonesia has, in the past three years, eclipsed Thailand, the Philippines and Malaysia to become the number one destination for Australian sex tourists. The latest figures, previously undisclosed to the public, show that 18 per cent of all sex offenders who appear on a state-based register come to Indonesia — that's 25 per month. Most start in Bali but they may travel to other destinations within the massive country.

Some are doubtless on holidays, Sheehan says. But for the dedicated predator, access to prey is what draws them, and there is plenty in a country where one-third of the population – 80 million people – are under 18 and desperate poverty makes them and their families susceptible to the lure of hard cash. On the busiest part of Kuta's tourist strip, little girls like Lina, 12, and her little sister Lisa, 7, simply walk up to these men in the street. They come from the dirt-poor mountainside villages of Karangasem in Bali's far east to sell woven bracelets to tourists. Other small children knock on car windows at traffic lights on Sunset Road or Benoa asking for money. Their mothers are often nearby, too, suckling babies and begging. These children – working for a living and starved of money, attention and affection – are incredibly vulnerable. "A bule [white foreigner] already promised me a job once I graduate from elementary school," Lina says proudly. She met him on Kuta beach a few years ago and he was now paying for her to go to school for the first time – she's so far behind that she's in third grade. Perhaps it's a legitimate offer of help, says slum school teacher Anggie Cahyani, from charity Sekolah Harapan Bali, but perhaps not. It can be hard to tell. But Anggie has seen plenty of examples of the wrong kind of charity.

In 1997, paedophile school teacher Peter Dundas Wallbran met his 8-year-old victim selling trinkets on the beach on Lombok. He offered to help, fostered the boy, paid for his education and clothing and charmed his family for seven full years while, in private, he was violently raping him. Whatever happens in Lina's friendship with the friendly westerner, everyone here knows that, at 12, her career as a beggar is coming to an end. Adolescents are simply less cute than their younger brothers and sisters, so their earning power falls sharply. "They get too old," says Nyoman Binar, an older woman also begging on the beach-front boulevard Jalan Pantai Kuta. "By 12, the girls are going to the massage [parlours]. I'm not sure what kind of massage because I don't have any girls." Lina's big sister, 20, already has a baby who lives in the village while she has worked for several years in a spa. When we ask what kind of massage she performs, Lina avoids the question. Western male tourists to Kuta, Seminyak or Sanur, though, know the answer. It's spelled out in the offers whispered into their ears by touts and taxi drivers: "You want sex, boss? We have girls – young girls". And, in a country where the age of consent is 18, it's barely disguised even on public websites extolling Bali's sexual secrets. One thread informs men about a short-stay hotel with available high school girls, but only out of school hours and before 7pm lest "their parents knock on your door".

Slum teacher Anggie says the lure of money and pressure from the family to earn it made it difficult for her to keep teenage girls' minds on their studies. Many have met bule "friends" in the streets who lure them with phones, cameras and jewellery. The ultimate goal for some, Anggie says, is to marry one, because all westerners are considered rich. The boys who get too old to beg often join one of a number of gangs such as Laskar Bali or Baladika Bali, where they are useful as footsoldiers before growing big enough to do the heavier lifting. A few girls do go back to the village to look after the babies. But there is very little future there. The eruption of Mount Agung in 1963 rendered the soil infertile and wrecked water storage. Life in the eight-month dry season became one long search for potable water, and people left to beg in the city. Today's young Kuta beggars and trash pickers are the fourth generation. Natalia Perry from the Safe Childhoods Foundation says there are two types of sex tourists: "prolific", who gather in paedophile forums, admit what they are and plan to abuse children; and "situational", who might see a young-looking girl or boy and give into temptation. Both types flock from Australia and other Western countries to Bali, and the Indonesian police are yet to attack the problem hard, she says.

"Of Indonesia, Cambodia, the Philippines and Thailand, Indonesia is the only country that has not tightened up." Even admitting there is a problem is difficult for some local authorities, Perry says. "They feel they have the 'Bali is Paradise Island' image to defend: it makes them very sensitive about it." In Western societies it's the historical abuse cases – from Rolf Harris to the Catholic priests –that have brought child sex assault to the fore. But in Balinese culture, people don't want to revisit old ills. "If you talk about something bad that happened in the past, you'll reawaken the evil spirits from the time," Perry says.

Indonesian police are also hamstrung by their investigative processes. They can only charge someone if a complaint is laid – in other words, if a child is prepared to make a statement. In a culture where parents may have helped facilitate the sex act, that is vanishingly rare. There is also a widespread view (including among police, though it appears nowhere in the law) that if someone, even a child, has been offered and accepted money for sex, no crime has been committed. Even if a man is arrested for paedophilia, another payment can see the problem go away. In one case last year, a South African man raped a 13-year-old girl who, unusually, made a complaint. The police arrested him, then helped facilitate a meeting at which the girl's parents came to a financial settlement with the rapist's family. For all of these reasons child sex tourism is not going away in Indonesia. An increase in internet infrastructure and the increasing ability to speak English at the village level might mean that the pay-per-view style of offence that has led to convictions elsewhere will also boom. Perry's organisation will soon launch a campaign in Bali to remind situational offenders that what they are contemplating is illegal and immoral. It attacks the self-serving justifications they use, such as "she needs the money" and "she wants it".

Prolific offenders – the planning paedophiles – will be reminded of a wide network of police forces, including the Australian Federal Police, the Indonesian Police and Interpol, who are now tracking them through their chat rooms and travel plans. Every time an Australian sex offender travels, the destination country receives an alert, Sheehan says. He also flags a new determination among Indonesia law enforcers to understand and address the problem. The case at the Jakarta International School – no matter how dubious are the facts – has galvanised Indonesian society. A recent conference talked about establishing a dedicated child protection taskforce. "They are now looking at a national response; they are not sitting idly by waiting for it to become a crisis," Sheehan says. Of people like "Malcolm", for example: "If we get information that this guy is doing something wrong in Indonesia, there is a good chance he's facing an extended period in an Indonesian jail."

Wallbrand, the Australian school teacher who raped a series of boys in Lombok, was caught in Australia, extradited to Indonesia, and sent to jail. Sheehan said one of the key reasons the AFP had big posts in south-east Asia was to combat the scourge of sex tourism. "It's up there with counter-terrorism and people smuggling," he says. "My advice to potential offenders is: reconsider travelling to Indonesia, the Philippines and other parts of southeast Asia, because you increasingly face the likelihood that you'll be investigated and then prosecuted."