The team of negotiators are made up of Indonesians and Philippines under the coordination of the Indonesian government.
The team was formed in line with the policy of the Indonesian government, which prefers negotiations to release the hostages, Luhut said.
Military option is not yet possible as the Philippine Constitution does not allow operation of foreign military in that country, he said.
"No, not yet (permit for military operation)," he said.
Meanwhile, Indonesia called for a trilateral meeting with Malaysia and the Philippines to discuss cooperation to create security in sea trade lanes.
The meeting will be held on Tuesday-Wednesday next week in Kuala Lumpur, Malaysia.
On Sunday three more Indonesians were taken hostage by the separatists group, added to seven other Indonesian sailors taken hostage earlier.
The three were crewmen of a Malaysian fishing vessel with seven crewmen, but non Indonesian crew members were allowed to go free by the separatist.
Indonesian military chief Gen. Gatot Nurmantyo was angered by the separatists selecting only Indonesians to be held hostage.
"What makes me very angry is they selected Indonesians (for hostages)," the general said.
Earlier former chief of staff of Army Strategic Reserve Command retired Maj. Gen. Kivlan Zen said he would join as an advisor to the team of negotiators.
The process of negotiations is expected to involve leader of the Moro National Liberation Front (MNLF), Nur Misuari.
Misuari led armed rebellion against the Philippine government in the 1990s seeking to force the government of former President Ferdinand Marcos to give more attentions to the condition of minority Muslim community in Southern Philippines.(*)