Asia will drive growth in sukuk sales in 2010, according delegates at a seminar on Korean sukuk hosted in Seoul last week by BNY Mellon. As the global financial markets recover from the financial crisis, Islamic finance is becoming an appealing alternative to conventional financial instruments. Sukuk feature in an increasingly sophisticated Sharia-compliant finance and structures market. They share many features of conventional bonds, such as standardized transactions structures and documents, and similar trading, listing and ratings characteristics.

Delegates also noted that a first South Korean sukuk might emerge as early as late 2010, pending legislation being passed by the Korean government. It was also highlighted that South Korean institutions are increasingly interested in Islamic financing to diversify capital raising avenues.

Malaysia continues to dominate the sukuk market today with an 80% market share in the global Islamic bonds market, but 2009 also saw other sovereigns such as Indonesia which saw rapid growth, and Singapore, which also made a relatively small but significant debut. Although a relatively latecomer to Islamic finance in Asia, South Korea is following the stated ambitions of its neighboring countries, such as Hong Kong and Singapore, in trying to establish itself as an international Islamic capital market hub. The country's National Assembly is currently considering a bill aimed at facilitating tax neutrality for the issuance of sukuk.