Rachel Smith dragged her bulging luggage to the check-in counter at Bali airport, worried she would have to pay excess for the hundreds of pirate DVDs she was taking back to Australia. But the airline staff did not raise an eyebrow: just another tourist taking advantage of Hollywood hits selling for less than a bag of popcorn. 'They're a bargain and some are still showing at cinemas,' Ms Smith raved, justifying piracy as a 'victimless crime'. Back in Kuta, the glass-fronted air-conditioned shops where Ms Smith bought the illegal copies were doing a roaring trade, blatantly operating on the main shopping strips. 'Business is good, but it used to be better,' complained one pirate DVD store manager, Ketut. Two years ago, DVDs produced by massive illegal factories in Jakarta sold in Bali for 20,000 rupiah (HK$16.65) each. Today they sell for less than half that due to escalating competition. Anti-piracy activists and copyright lawyers argue the trade in fakes hurts not only original rights owners but denies this third-world country much-needed taxation and licensing revenues. What's more, the very public pirate industry smells of something far more sinister and troubling. 'It's inconceivable that the police don't know it goes on,' said one source who co-ordinates raids with police on illegal operators around Indonesia, where pirate copies account for some 92 per cent of total optical disc sales. But the new government, keen to win back international investors' confidence, is showing increased resolve to tackle the issue. In late December, Human Rights and Legislation Minister Hamid Awaluddin took the unprecedented step of accompanying copyright enforcement officers to Indonesia's first-ever raid on an illegal DVD factory. And in January, Indonesian customs at Jakarta's main port made their largest pirate game seizure: 730,000 PlayStation II games believed to be destined for the Middle East. 'There's a degree of commitment and they appear to be getting serious about fighting intellectual property piracy,' said Mike Ellis, regional director of the Motion Picture Association (MPA), whose members lose an estimated US$900 million in potential annual revenue to piracy in the Asia-Pacific. 'But unfortunately we're not seeing sufficient proactive raids to really disrupt the operations.' The raids temporarily upset Indonesia's supply channels, but stores like Mr Ketut's fill the gap by importing from Malaysia. In the fifth most corrupt country, as ranked by Transparency International, translating the government's increased resolve into action is the biggest hurdle. Mr Ketut said his boss pays monthly bribes for police to turn a blind eye. Last December, after President Susilo Bambang Yudhoyono came to power promising to eradicate corruption, the price of immunity went up. 'Police arrested one of my colleagues, but they released him after my boss agreed to pay them more money,' said Mr Ketut.