The passenger boat was ferrying 27 people some 50 kilometre off the coast of Tuban, a small town in East Java, when it collided with a ship transporting tapioca starch from Vietnam.
All 22 Vietnamese crew members aboard the cargo vessel were safe but the speedboat carrying mostly Indonesian fishermen sunk after the collision.
"Twelve people have been rescued alive while 15 others are still missing," Frans Supriadi, a spokesman for the local disaster agency, told AFP.
Supriadi said the spot where the accident happened was along a busy trade route and witnesses suspected the speedboat driver was sleepy and failed to notice the Vietnamese ship.
The Indonesian archipelago of more than 17,000 islands is heavily dependent on boat transport, but safety standards are lax and fatal accidents common.
In early November at least 54 people died after a overcrowded speedboat was carrying three crew and 98 passengers, mostly Indonesian migrant workers, from Malaysia to Batam struck a reef and sunk.
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