Police guard the scene of the shooting at a villa in Sanur.
DENPASAR: Police on Indonesia's resort island of Bali stepped up security in tourist hotspots Monday after five suspected terrorists were shot dead in raids.
"We beefed up security in all places especially at entertainment spots, hotels and malls. What's clear, we are on alert," Bali police spokesman Hariadi told AFP.
Muslim majority Indonesia has been rocked by a series of attacks staged by regional terror network Jemaah Islamiyah in recent years, including the 2002 Bali bombings which killed 202 people.
Police said they gunned down on Sunday evening five people in two raids here and in Sanur, south of the island, which is popular among tourists for its exotic beaches.
Over one hundred members of the elite Detachment 88 counter-terrorism force were seen in Sanur where three suspects were killed in a villa, AFP's correspondent said at the time.
The men planned to carry out an act of terrorism and several robberies and are believed to be part of a group who killed an officer in a spectacular 2010 bank robbery to raise funds for terrorist attacks, police said.
The men are linked to previous terror investigations, national police spokesman Saud Usman Nasution told reporters.
The 2002 Bali bombings thrust Indonesia into the front lines of the war on terror. Blamed on Jemaah Islamiyah, the blasts forced Jakarta to accept US and Australian help to train local counter-terror police.
The underground network splintered under the pressure of arrests and killings, giving birth to even more radical offshoots and loosely affiliated elements that continue to undermine Indonesian security.
"The suspects were raising funds for their terror activities and Bali is now their target to source for funds," Saud said.
In the raids, police seized two firearms and dozens of bullets from the suspects, who were planning to rob a moneychanger and a jewellery shop.
Saud also said police are not ruling out the possibility that the group might launch an attack on the public holiday on Friday to mark the Hindu new year.
Nyepi, as the day is known locally, will see the island shut down as Bali's Hindu majority are confined to their homes for a day of reflection free from work, play, talking -- and for some even eating.