The wooden boat was carrying 29 people when it capsized Friday afternoon after departing from Takalar Lama river to Tanah Keke island in the province of South Sulawesi.
Twenty people have been found alive but rescue teams are still searching for the missing passengers.
The cause of the accident is still not known, transport ministry spokesman Lollan Panjaitan told AFP.
"Since the wooden fishing boat departed from an unofficial location, not from an official harbour, we don't have much control over it," he said, adding that the boat didn't have a legal permit to make the trip.
The Indonesian archipelago of more than 17,000 islands is heavily dependent on boat transport but safety standards are poor and accidents occur regularly.
In January a passenger boat ferrying around 200 people from the capital Jakarta to nearby Tidung island left more than 20 people dead after it caught fire.
In November, at least 54 people died when an overcrowded speedboat carrying three crew and 98 passengers struck a reef and sunk on its way from Malaysia to Batam in Indonesia.