All 108 people on board are reported to be safe.
The overnight ferry from Surat Thani province was about to arrive at Koh Tao, a popular tourist destination off the Thai coast, when one of the passengers heard a crackling sound and smelled smoke.
Maitree Promjampa said he saw billowing smoke and fire less than five minutes later, which was when people started shouting and rang the alarm.
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