(Footage of the sinking follows advertisements)
Luckily, the Phuket-based dive boat Peter Pan was close by to rescue all on board the Ranong-based Aladdin, which began to take on water at around noon, sinking so fast that passengers had to leap for their lives, many of them having no time to put on life jackets.
Aftonbladet quoted Swedish dive instructor Dennis Karlsson who was on the Peter Pan when the distress call from the Aladdin went out.
"It was just a coincidence that our boat was there and could come to the rescue," the Swedish newspaper quoted him as saying.
The Aladdin capsized and took just minutes to sink in 25 metres of water.
"It was really, really serious. It took on a lot of water," Mr Karlsson said.
"People threw themselves headlong into the water. Some were sucked under the water with the boat before they resurfaced and were pulled out. It was really amazing that everyone survived."
No one was seriously hurt.
Mr Karlsson said he understood the boat was holed when it ran over something in the water which was ramed into the hull by the propeller."
He told Aftonbladet that passengers on the Aladdin told him they were on a four-day dive trip in the Andaman Sea, emabarking in Khao Lak.