A Comparison of Islamic Banking Regulations between Indonesia and Malaysia from the Perspective of Legal Certainty: Examining the Problem of Regulatory Disharmony in Indonesia

Abstract

This study aims to analyze and compare Islamic banking regulations in Indonesia and Malaysia from the perspective of legal certainty, with particular attention to the problem of regulatory disharmony in Indonesia. The research employs a qualitative method using a normative-comparative legal research design, chosen to enable in-depth analysis of legal norms, institutional structures, and Sharia governance frameworks rather than quantitative measurement. The study is conducted in Indonesia and Malaysia, as both countries represent major Islamic banking jurisdictions in Southeast Asia with distinct regulatory models. Data are enriched through expert insights obtained from six key informants, selected purposively based on their academic, regulatory, and professional expertise in Islamic banking law, to ensure analytical depth and normative relevance. The findings reveal that Indonesia’s Islamic banking regulation suffers from fragmented authority, inconsistent normative references, and weak institutional integration between statutory law and Sharia rulings, resulting in limited legal certainty. In contrast, Malaysia demonstrates a more harmonized and centralized regulatory framework that provides clearer legal certainty through statutory recognition of Sharia governance. The study recommends strengthening regulatory harmonization in Indonesia by enhancing the binding legal status of Sharia rulings, improving institutional coordination, and adopting best practices from the Malaysian regulatory model to support a more predictable and coherent Islamic banking legal framework.