Deborah Cassrels – On a flawless day in Bali, tourists are revelling in sun and surf and padding about plush hotels. Beneath the highly developed tourism industry a deepening health crisis is gripping the island.

Encapsulating the trend is a tiny Balinese girl whose unfocused gaze indicates her poor state of health. Asih, two, is pale and listless as she wanders about her home of the past year, Anak Anak Bali orphanage, or Bali Kids, in Kerobokan. Asih is having trouble fighting off a common cold. She is HIV positive and has tuberculosis, preventing her immune system from kicking in quickly.

She is one of the estimated 7317 HIV-AIDS cases in Bali, part of an epidemic, much of it heterosexually driven, dubbed an AIDS tsunami by health workers. Known cases are thought to be the tip of the iceberg. The infection rate has jumped 81 per cent from 4041 in late 2006, according to the Bali Department of Health. The rate is alarming not only for the exponential rise but because health providers are questioning the veracity of records.

Figures are thought to be much higher than reported and their collection is being thwarted by discrimination, social taboos and ignorance of the disease, doctors say. Local men who engage in same-sex relationships, visit sex workers without using condoms or inject drugs with infected needles are not telling of their risk-taking behaviour, even on their deathbeds.

But data shows migrant Indonesians and Balinese men, many of whom work in tourism areas, are spreading the virus from sex workers to unsuspecting spouses, corroborating a Health Department study that found 48.9 per cent of sex workers only "often use" condoms. Four times as many men as women have HIV-AIDS.

As the epidemic ravages families, a new generation is falling victim. Mothers, usually widows whose partners have died, are unknowingly transmitting the virus to children at birth. Many children are being forced into orphanages as a result.

Last month tourism officials floated the idea of legalised prostitution, while examining the risk to tourists and their possible role in promulgating the disease. Although tourists are believed to be largely unaffected, it's unknown how many are at risk. In the firing line are Bali's biggest fans, Australians, who contributed a whopping 56 per cent rise to foreign arrivals with 213,361 visits in the year to May compared with the same period last year.

Asih's story, which includes family disintegration coupled with a backlash from poorly educated villagers, is typical. After Asih's father died from AIDS-related illnesses, her HIV-positive mother fled her village in Singaraja, north Bali, when fearful villagers warned they would kill her baby if they did not leave. Both ended up in Sanglah General Hospital, Denpasar, for months. They are being treated, successfully, with antiretroviral drugs but Asih's mother, unable to care for her child, surrendered her to Bali Kids, which offers free clinical and dental treatment, and provides mobile medical services to other orphanages and villages.

About 4000 children live in 71 orphanages around Bali, many disreputable and none of which accept known HIV-positive children, says Bali Kids' project co-ordinator, Adelaide-born Brenton Whittaker. Yet many are sent to orphanages after their parents die of AIDS-related illnesses. Stories abound of exploitation, slave labour and funding ending up in the pockets of corrupt operators.

"At Bali Kids it's extremely difficult for anyone to scam us because it's medical treatment. I see the child receive the treatment, so I can see where the money's going," says Whittaker.

When Inquirer visits a Dickensian-looking Denpasar orphanage housing 40 children ranging from infants to teens, the owner is away indefinitely. Children cook meals, consisting of only noodles and rice, in a squalid kitchen over an open fire. An eight-storey concrete maze, it overlooks a rural back yard where clothes dry amid piles of rubbish. Girls share a small dormitory, two to a single bed, while boys sleep on a mat on the ground floor. All share an abysmal toilet facility.

Lying abandoned are countless donations of clothes and toys. This is one of the orphanages where the Bali Kids medical team regularly treats children but the owner does not permit HIV testing, which is free in hospitals and clinics.

Involved in charity work in Asia for more than 20 years, Whittaker received an Order of Australia medal for humanitarian services to children in 2005 when Bali Kids opened. Bali Kids is first a medical facility, caring for underprivileged children suffering from malnutrition and illnesses such as TB and scabies. Increasingly, it cares for impoverished HIV sufferers.

"That's our calling because no one else wants to deal with it," Whittaker says.

Local authorities also refer children with HIV to Bali Kids. "You see the children arrive so sick and leave happy and healthy so you feel you have achieved something," says Whittaker, attesting to good responses to antiretroviral treatment. "Plus we are educating them... so they have the opportunity to get into the workforce."

Whittaker has been instrumental in securing three scholarships in Australian private schools.

Meanwhile, the latest HIV screening study in March by the Bali Health Department reveals Bali has the second highest infection rate in Indonesia behind Jakarta and the island's young are most vulnerable, with those in the 20 to 29 age range peaking at 46 per cent. Sexually active teenagers between 15 and 19 account for 2.3 per cent of HIV.

"We are seeing pregnant teens who have contracted HIV while at high school but we don't have the real numbers, that's the problem," says consultant pediatrician Ketut Dewi Kumara Wati at Sanglah Hospital. Efforts to curb the spread are proving arduous. Many locals are unaware the virus even exists. Those who suspect they are infected typically shun testing and leave preventive treatment too late. Adding to the crisis, some hospitals turn away patients.

"It's very hard to get medical staff and doctors to work with HIV-AIDS patients," says Dewi, the only pediatrician at Sanglah's children's AIDS ward. She believes the true number of cases on the island is about 10,500.

The highest prevalence of the virus is in the capital, Denpasar, and the Buleleng and Badung (the Kuta area) regencies, tourist districts that villagers and migrants gravitate to for work.

Tourism officials are warning of the effect the virus could have on Indonesia's top tourist spot but claim the Balinese government would rather sweep the issue under the carpet.

"They don't want to touch this. They are confusing it with a moral issue. They don't want to talk about sex, but it's a health issue, a disease," says Ida Bagus Ngurah Wijaya, head of the Bali Tourism Board. While Wijaya does not directly link tourism to transmission rates, Bali's contact with foreigners far surpasses that of the rest of Indonesia, and intermingling is a fact.

His solution? A government-controlled prostitution zone with regulated health checks. "How can you control public health if you don't control the sex workers?"

Yet he says a red-light district would taint the island's image. "We cannot promote sex tourism. It would send the wrong message. People don't come here for that."

But it can't be said sex tourism doesn't exist. Sex workers in Bali attract 88,000 customers a year, this year's report shows. And although HIV infection rates among foreigners are at negligible levels, the real situation is hard to gauge.

Figures for the second largest group with HIV, injecting drug users, estimated at 1371, have stabilised since 2002, according to the study, but the prevalence of the virus among transvestites and prisoners is increasing.

Kerobokan jail, where the Bali Nine drug traffickers and Schapelle Corby are detained, has HIV testing and counselling and the highest incidence of infection in a Bali jail, at 29 prisoners.

Most HIV programs are funded generously by AusAID, through the HIV co-operation program for Indonesia, which provided $500,000 in 2009-10. AusAID's programs have been instrumental in bringing down infection rates among intravenous drug users. Overall it has provided more than $4.8 million for HIV-AIDS Bali programs since 2002.

Yet Bali is at risk of losing a generation, as increased numbers of HIV-positive mothers – about 600 a year – endanger their children, says Dewa Nyoman Wirawan, of the Bali Aids Commission and public health professor at Denpasar's Udayana University.

Dewi agrees. "Without prevention many children will die. It will be the loss of a generation. Children are slow progressers and it will not show 'til they are in their teens," she says.

A report by Wirawan last June on the UN Millennium Development Goals warns HIV-AIDS is the largest inhibitor to achieving child mortality reduction goals. "The estimated number of residents in Bali to be infected with HIV... will double in a very short time. The big challenge... is the explosion of the epidemic through heterosexual contact and the still low level of condom use.

"If there is no prevention of transmission from pregnant mother to her baby, then in one year it is expected approximately 300 infants will be infected with HIV. Usually all of these children will die... [in] under five years."

The suppression of safe-sex messages because of social taboos on AIDs-related issues are at the core of the problem, says Tuti Parwati Merati, of the Bali Aids Commission, who is also head of tropical and infectious diseases at Sanglah Hospital and the University of Udayana's medical school. With about 150 new patients admitted in the late stage each month to Sanglah Hospital, she battles the problem daily.

"More than 80 per cent of HIV-AIDS patients throughout Indonesia wait until it's too late because they do not know they are infected by HIV," says Merati.

Frustrating medical efforts are farcically low statistics on deaths from AIDs, estimated at 341 in total in Bali. Merati, who diagnosed the first AIDS case in Bali – and Indonesia – in 1987, suspects substantial numbers of deaths from AIDS are unreported. She concedes that awareness of the disease remains pitifully low.

Although testing and antiviral treatment is free, antibiotics and antifungal treatments are not, a factor she fears stops people following up on related illnesses.

The Balinese, about 93 per cent of whom are Hindu, do not religiously oppose condom use, but Muslims do. A safe-sex advertisement was pulled from Indonesian television stations last year because Muslim groups believed it was promoting promiscuity and adultery.

Entrenched animistic beliefs also inhibit safe-sex programs, Dewi says. People often believe their illness is related to karma or a punishment for perceived bad deeds. Some think it's the result of a curse from an enemy and most seek help from witch doctors. Amanda Morgan, country representative of Bali's Burnet Institute in Indonesia, which combines health research, including HIV initiatives, with the Burnet Institute (Australia), concurs numbers are much more extensive than acknowledged, the response driven by inaccurate data.

"When you don't have the data you have to question if you are responding in the most effective way."

The Indonesian Ministry of Health estimates 40,000 people have HIV-AIDs, while UNAIDS puts the number at 270,000.

"We know it's an iceberg phenomenon but as we dig deeper we are seeing increasing numbers, and particularly numbers of children, not being addressed," Morgan says.

When Putu Utami founded the outreach group Bali Plus in Denpasar in 1995, her husband had just died of AIDS-related illnesess. She found out he was gay after he died, a week after the birth of their son, now 15. She had learned of her own HIV infection six months into the pregnancy.

"My husband never told me he had AIDS. When I told him he had infected me and asked why he had the virus, he just cried. "I was scared for my baby. I was scared I was going to die... I was very angry."

Mercifully, her son is HIV-negative and Putu has responded well to treatment. She married again in 2003 and says her new husband, although initially sceptical, is accepting of her situation.

She only recently told her son, who lives with her first husband's parents, of her HIV status. "He was very angry and sad, and asked me if his father had another girlfriend." She pleaded ignorance. Her parents-in-law still don't know their son was gay.