A 48-year-old Australian man has been arrested for allegedly possessing hashish in the seaside town of Sanur in Bali's south-east.
Bali police said they detained the Australian, GS on Saturday afternoon after finding 7.32 grams of hashish, the resin from cannabis, in a suitcase at his house in Sanur.
They said GS, who had been living in Bali for about five years, told them he had sourced the hashish from a 54-year-old retired British journalist with the initials DM.
DM was born in Shrewsbury, the county town of Shropshire in England.
DM was later arrested at On On, a bar in Sanur, with hashish inside aluminium foil.
When police went back to DM's house, which was also in Sanur, they found more hashish inside a boxing glove.
The total nett weight of the hashish allegedly possessed by DM was 10.09 grams.
Police said DM told them he had bought the hashish from another man, whose identity and location is unknown.
"We arrested an Australian man, GS, an entrepreneur, and DM, a retired British journalist," Denpasar police narcotics chief Gede Ganefo told Fairfax Media.
"Their respective consulates have been notified."
He said they had both been named suspects under article 112 of Indonesian law for possessing category one narcotics (not a plant).
This carries a maximum penalty of life imprisonment for possession of more than five grams and a minimum penalty of five years' jail.
Indonesia has severe penalties for illicit drug use.
Townsville man Nicholas Langan was released in January after serving a year in Kerobokan jail for sharing a marijuana joint on the beach in Canggu.
And in 2005 Australian Schapelle Corby was sentenced to 20 years' jail for importing 4.2 kilograms of cannabis into Bali in her bodyboard bag, although she was released after serving only nine years.
A DFAT spokesperson said: "The Department of Foreign Affairs and Trade is aware of the arrest of an Australian man in Bali. Our Consulate-General in Bali is making arrangements to visit the man and stands ready to provide consular assistance in accordance with the Consular Services Charter."