Buton Police and residents in Southeast Sulawesi evacuated on Tuesday 197 passengers of KM Uki Raya, which sunk near Wabula in Wasampela village.
Buton Police chief Adj. Sr. Comr. Fachrurozzi said two passengers - Wa Halifa, 3, and Wa Hujuni, 32 - died in the sinking.
"The two victims and the survivors have been picked up by their families," he said as quoted by Antara news agency.
He said that according to ferry's manifest, 92 passengers, nine children and 11 crew members were on board, but the police have rescued 197 people so far.
Fachrurozzi said the ferry, which was heading for Wangiwangi in Wakatobi regency, departed from Baubau at 10 p.m. on Monday. However, after three hours at sea, it was hit by 4- to 5-meter waves.