Sharia Governance and Regulatory Supervision in Islamic Banking: A Comparative Legal Analysis Between Indonesia and Malaysia

A Comparative Legal Analysis Between Indonesia and Malaysia

Authors

  • Daffa Universitas Muhammadiyah Surakarta
  • Triyono Adi Saputro Universitas Muhammadiyah Surakarta

Keywords:

sharia governance, fiduciary duty, strict liability, indonesia, malaysia

Abstract

This study aims to critically analyze and compare the legal frameworks for Sharia governance and regulatory oversight in Islamic banking between Indonesia and Malaysia. This normative-doctrinal legal research employs a statutory analysis of Indonesia’s Law No. 21/2008 and Malaysia’s IFSA 2013, combined with a comparative approach. Indonesia’s decentralized-partnership model is flexible but prone to regulatory lag and limited liability for the Sharia board. Conversely, Malaysia’s two-tier centralized model ensures immediate legal certainty but risks triggering defensive Sharia oversight due to the aggressive personal strict criminal liability imposed under Section 28 of the IFSA 2013. This study highlights the paradigm shift in the supervisory body’s fiduciary duty, evolving from a purely advisory role in Indonesia to that of strict compliance officers in Malaysia. It proposes the concepts of a “Structural Regulatory Bridge” and “Proportional Civil Liability” to reform Indonesia’s Sharia governance without stifling product innovation in the Islamic financial sector.

Author Biography

Triyono Adi Saputro, Universitas Muhammadiyah Surakarta

Ab Ghani, N. L., Mohd Ariffin, N., & Abdul Rahman, A. R. (2024). The extent of mandatory and voluntary Shariah compliance disclosure: evidence from Malaysian Islamic financial institutions. Journal of Islamic Accounting and Business Research, 15(3), 443–465. https://doi.org/10.1108/JIABR-10-2021-0282

Abdul Rahman, R., & Bukair, A. A. (2021). Shariah Governance in Islamic Financial Institutions.

Journal of Islamic Accounting and Business Research, 12(3), 345–360. https://doi.org/10.1108/JIABR-05-2020-0156

Alam, M. K., Islam, M. S., & Runy, M. K. (2021). Shariah governance system of Islamic banks: Theory and practice. Journal of Islamic Accounting and Business Research, 12(6), 882–901. https://doi.org/10.1108/JIABR-11-2020-0352

Alam, M. K., Rahman, M. M., & Runy, M. K. (2022). The impact of Shariah governance on Shariah compliance quality and performance of Islamic banks. Journal of Cleaner Production, 342, 130844. https://doi.org/10.1016/j.jclepro.2022.130844

Apriantoro, M. S., Mawarti, A. A., & Puspa, F. N. (2025). Mapping the landscape of risk management in Islamic banking: A bibliometric exploration. TEM Journal, 14(1), 312–324. https://doi.org/10.18421/TEM141-36

Arifin, J., Aulia, R., Nubahai, L., Mas’ad, Saleh, M. A., & Berliana, M. (2025). A comparative study on Sharia governance and supervisory authority in Islamic banking in Indonesia and Malaysia. Malaysian Journal of Syariah and Law, 13(3), 604–614. https://doi.org/10.33102/mjsl.vol13no3.737

Astuti, S., Rahman, A., & Prabowo, H. Y. (2024). Integration of Shariah audit and Shariah governance in supporting ESG compliance: A systematic literature review. Riset Dan Jurnal Akuntansi, 8(1), 543–558. https://doi.org/10.3395/owner.v8i1.3213

Cherni, S., & Amar, A. B. (2024). Does digitalization affect shariah supervisory board efficiency? Evidence from Islamic banks. Journal of Islamic Accounting and Business Research, 15(4), 512–531. https://doi.org/10.1108/JIABR-06-2023-0182

Faizi, F. (2024). Sharia governance in Islamic financial institutions: A comparative review of Malaysia and Indonesia. EL DINAR: Journal of Sharia Finance and Banking, 12(1), 89–107. https://doi.org/10.18860/ed.v12i1.25135

Febrina, I., & Abdulah, B. (2024). Hisbah in the Context of Shariah Governance in Islamic Finance: A Comparison Between Indonesia and Malaysia. Jurnal Ilmiah Manajemen Kesatuan, 12(6), 2457–2466. https://doi.org/10.37641/jimkes.v12i6.2957

Hasan, A. F. S., & Muhsyaf, M. (2024). Comparative financial performance of Islamic banks under diverse legal and regulatory systems in Southeast Asia. Journal of Islamic Economics Lariba, 10(1), 45–62. https://doi.org/10.20885/jielariba.vol10.iss1.art3

Jan, A. A., Lai, F. W., & Tahir, M. (2021). Developing an Islamic Corporate Governance framework to examine sustainability performance in Islamic Banks and Financial Institutions. Journal of Cleaner Production, 315, 128099. https://doi.org/10.1016/j.jclepro.2021.128099

Latif, R., & Ahmad, N. (2021). Shariah governance of digital assets in Malaysia: Challenges and prospects. Malaysian Journal of Syariah and Law, 9(2), 201–219. https://doi.org/10.33102/mjsl.v9i2.312

Mukti, T. A. (2023). A comparative study on the development of Islamic banking in Indonesia and Malaysia from a regulatory perspective. Tawazun: Journal of Sharia Economic Law, 6(2), 180–198. https://doi.org/10.21043/tawazun.v6i2.29800

Poundrianagari, A. K. (2021). Perbandingan tanggung jawab dewan pengawas syariah di bank syariah indonesia dengan bank syariah di malaysia. Dharmasisya: Jurnal Program Magister Hukum FHUI, 1(4), 22–38. https://scholarhub.ui.ac.id/dharmasisya/vol1/iss4/2/

Saputro, T. A., Isman, Setiawati, D., Alam, A., & Febriandika, N. R. (2025). Geographical indications and maqāṣid al-sharī‘ah: Realizing intellectual property as an instrument of economic justice. Al-Muamalat, 12(2), 339–358. https://doi.org/10.15575/am.v12i2.51236

Sencal, H., & Asutay, M. (2021). Ethical, social, and environmental governance in Islamic finance. Journal of Business Ethics, 172(4), 789–805. https://doi.org/10.1007/s10551-020-04533-z

Suryani, Y., Siregar, S., & Nurlaila, N. (2024). Shariah governance, leverage, and their impact on Islamic corporate social responsibility in Sharia banking in Indonesia. International Journal Ihya’ ’Ulum Al-Din, 26(1), 143–155. https://doi.org/10.21580/ihya.26.1.20482

 

Triasari, D., & De Zwart, F. (2021). Shariah governance in Islamic banking: Comparative analysis between Indonesia and Malaysia. Bestuur, 9(2), 113–125. https://doi.org/10.20961/bestuur.v9i2.51234

Tuzzahroh, F., & Laela, S. F. (2022). Sharia audit and Shariah compliance of Islamic financial institutions: A bibliometric analysis. Journal of Sharia Economics: Theory and Application, 9(6), 815–833. https://doi.org/10.20473/vol9iss20226pp815-833

Wardana, A., & Andri, M. (2024). A comparative study on Sharia governance and supervisory authority in Islamic banking in Indonesia and Malaysia. Malaysian Journal of Sharia and Law, 12(1), 105–122. https://doi.org/10.33102/mjsl.vol12iss1.737

 

Downloads

Published

2025-06-28

Issue

Vol. 2 No. 1 (2026): Aksaradinar : Journal of Research in Accounting And Governance

Section

Articles