Shariah Governance Structure in Islamic Banking System: Comparative Analysis between Malaysia and Indonesia

The operations and services offered by the Islamic banking institutions in Malaysia and Indonesia are compelled to be conducted concomitantly with the Islamic law principles. The ascertainment towards shariah compliance in Islamic banking industry depends on the effectiveness of the implimentation of shariah governance system. In Malaysia, the shariah governance structure is resulted from the enacment of Central Bank Act 2009 and Islamic Financial Services Act 2013, while the Law No. 21 Year 2008 concerning Islamic banking, Law No. 12 Year 2011 concerning making rules, Indonesia Bank Regulation No 10/32/PBI/2008 and Majelis Ulama Indonesia Power of Attorney No 754/MUI/11/99 have established the shariah governance system in Indonesian Islamic banking. In conjunction with that, this article will analyse comparatively the structure of shariah governance system in Islamic banking of Malaysia and Indonesia. In archieving the objective of this article, the legal infrastructure of shariah governace and the highest authority in Islamic banking system for both countries been scrutinised and analysed.