Josephus,

The captains must abide by all international and local laws. Their country of flag as well. The powers of a captain are very broad and his responsibilities reflect that.

Indonesia has been getting off very lightly for its responsibilities. See Article 94 linked below,

http://www.un.org/depts/los/convention_agreements/texts/unclos/part7.htm

The boats are Indonesian flagged (Nominally at least).
The captains and crew are Indonesian (by birth).
The point of departure is Indonesia (Geographically)
The passengers seem to have some sort of legal residency in Indonesia otherwise they could and would be deported by the Indonesian authorities.
Their departure from Indonesian ports must be under the oversight of Indonesian officialdom.
Therefore it seems to me that the whole process is sanctioned and overseen by Indonesia.
So intercept them in international waters, leave them with enough fuel to make it back to their port of departure and tow them back inside Indonesian territorial waters and let them go.
They can then choose to either go home or drift all the way to Australia.
If I was the captain I know what I would be doing.

The boaters are imported from Malaysia. Indonesia is just a departure place. Chances are Indonesia would not know where they depart from or how many are on board.

[CORRECTION]

Re:<<The boaters are imported from Malaysia. Indonesia is just a departure place. Chances are Indonesia would not know where they depart from or how many are on board>>

They fly into BOTH Malaysia AND Indonesia.

Therefore they must have clearance to enter the country in the first place which means the Indonesian govt knows they are there.

I ask the question:
* If the Indonesian army entered our borders would we defend our borders or just allow them free access?

*For those who believe in open borders, Do you believe Australia should abandon our armed forces and give everyone free access?

*But I just wonder if you have locks on your doors, and fences around your yards?

*Do you sanction theft?