Firefighters worked through the early hours of Sunday morning to bring the fire under control (pictured, locals watch on as fire crews fight the blaze)

An Australian has been arrested for allegedly stealing a car, hitting two people, and lighting the vehicle on fire in Bali, Indonesia.

The man, identified by local police only as RJW, allegedly confronted a local who was parking his Toyota Avanza outside a hotel in Seminyak about 12.30am on Sunday. 

The Australian is alleged to have aggressively knocked on the car window outside the hotel, called Eden the Residence at the Sea, and forced the victim from his car. 

He then allegedly jumped inside the vehicle and drove away. 

The local man chased after the car with the help of a security guard. 

After the car sped away it struck two people on a nearby road because it was being driven dangerously, police said. 

The Balinese local used phone tracking software to trace a bag inside the car to a road 8km east of the hotel.

He went to the location but could not find his car and alerted local police. 

Firefighters worked through the early hours of Sunday morning to bring the fire under control (pictured, locals watch on as fire crews fight the blaze)

Firefighters worked through the early hours of Sunday morning to bring the fire under control (pictured, locals watch on as fire crews fight the blaze)

Firefighters extinguished the fire (pictured above) revealing the scorched bodywork

An Australian man was arrested in Bali after allegedly stealing a car (pictured) outside a Seminyak hotel in the early hours of Sunday

An Australian man was arrested in Bali after allegedly stealing a car (pictured) outside a Seminyak hotel in the early hours of Sunday

Denpasar Fire Brigade then informed police a car had caught fire near a building on the same street.

Police alleged the Australian set fire to the vehicle intentionally, with the flames also catching the home alight. 

No one was killed or harmed in the fire, which was extinguished by fire crews by about 5.30am.

Footage from the scene showed the Avanza engulfed in flames tucked against the side of a building as flames burned an overhead awning. 

Firefighters from two trucks turned their hoses on the SUV and the building beside it. 

The car was completely destroyed in the fire, with the interior burnt away and the windows outwardly shattered in the blaze. The home suffered minor damage.

The Australian was arrested and taken to North Kuta Police Station. 

The Toyota Avanza is estimated to have been worth just over $14,000.

Denpasar Police spokesperson Ketut Sukadi confirmed the investigation is ongoing.

Two people were allegedly struck by the speeding vehicle (pictured, burnt out) before it was later found engulfed in flames

Two people were allegedly struck by the speeding vehicle (pictured, burnt out) before it was later found engulfed in flames

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