The Indonesian Navy fast missile boat KRI Rencong sank in the waters of Sorong, West Papua, on the afternoon of September 11.
A navy official said the 50-metre vessel was out on patrol when it caught fire some 32 kilometres from shore.
All 37 crew members were rescued without injury.
Rencong was one of four Mandau-class patrol boats delivered to the Indonesian Navy by Korea Tacoma Marine Industries in 1979 and 1980.
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