The Virgo Transport 8 was carrying 243 people on a 20-hour voyage from Surabaya in East Java to Banjarmasin in South Kalimantan when it capsized in bad weather early on Sunday.
Rescuers had not been able to find more survivors or bodies until the fifth day of the search due to strong currents and large waves, so authorities decided to right the ship to make rescue operations easier.
The ship remained partially afloat for days but had now sunk to the seabed, authorities said late on Thursday.
Six people were confirmed dead and 108 survived the incident.
The tallies have not changed since Sunday.
"The salvage operation is already under way. An observation was conducted yesterday, and today the team will likely move toward the location (of the ship)," Banjarmasin Navy Commander Galih Nurna Putra said.
The plan was to pull the ship onto a shallower seabed and then right it, Galih said.
The operation would be led by the ship's owner, as mandated by Indonesian law, and backed by the rescue agency, the navy, and maritime police, said I Putu Sudayana, the head of the Banjarmasin rescue agency.
Once the ship was turned upright, rescue and evacuation operations would begin, Putu said.
"As long as the ship is still at the seabed, the dive team dared only to remain outside the ship," he said.
Indonesian authorities also deployed eight ships and two helicopters on Friday to conduct the air and sea surface searches, Putu said, adding that operations were still hampered by strong winds, currents and waves.
Rescuers also allowed two representatives from the families of victims to join the search on Friday so they could understand the unfavourable weather conditions at the location and the technicalities of the search, he said.
On Thursday, the navy diving team were able to approach the ship, take footage and find evidence such as wallets, ID cards, and hundreds of water-damaged parcels and plastic-wrapped packages, Galih said.
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