Assessing Legal Authority and Accountability: A Comparative Analysis of Indonesia’s Dewan Pengawas Syariah and Malaysia’s Sharia Committee

Abstract

Governance challenges in Islamic financial institutions stem from legal model dependencies, authority deficits, and agency conflicts involving Shariah supervisors. This study comparatively examines the legal authority and accountability of Indonesia's Dewan Pengawas Syariah (DPS) and Malaysia's Sharia Committee (SC) through a theoretical approach. The research uses a normative-comparative legal method, analyzing regulations, legal literature, and three primary theoretical lenses to evaluate governance effectiveness. The results indicate that Indonesia relies on a civil law system in which DPS authority depends on codification, whereas Malaysia applies a common law system backed by binding statutes and strict criminal sanctions under IFSA 2013. Although the reforms in UU P2SK and POJK 2/2024 have elevated the legal status of DPS members to be equivalent to directors and mandated four core governance functions, structural gaps in law enforcement, financial independence, and potential agency conflicts remain significant across both Islamic financial jurisdictions. Conclusion: Indonesia's reforms show convergence toward the Malaysian model but leave lingering structural challenges in law enforcement and supervisory independence. This study offers strategic recommendations for regional harmonization of Shariah supervision aligned with global standards to strengthen industry credibility.