Witnesses described passengers jumping into the water without life vests as the boat - carrying 51 people - capsized outside a busy Indonesian port, while others on board are feared to be trapped inside the boat, rescue officials said.
"The boat had only been sailing for about 10 minutes when it was hit by a wave. It started to tilt and capsized, when it was still very close to the port" said Octavianto, spokesman of the local search and rescue agency, who like many Indonesians go by one name.
Navy personnel have been dispatched to search for the remaining passengers, said Octavianto. However, passenger manifests in the region often do not record all of those on board.
The accident occurred as the boat left Tarakan in North Borneo province Tuesday morning to Tanjung Selor.
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"Witnesses said the sea was quiet when the boat capsized so I don't think the accident was due to rough seas," said Octavianto.
It is the latest fatal boat accident in the vast Indonesian archipelago, which relies heavily on boats to ferry people around its 17,000 islands, but has a patchy safety record.
At least 23 people died when a tourist boat from Jakarta carrying about 250 local holidaymakers to celebrate the New Year on nearby Tidung island burst into flames.