Islamic bond stuck in limbo

The interest of Korean companies in sukuk bonds has grown after the difficult borrowing conditions they experienced during the 2008 global financial crisis.

The Korean government last year promised to ease restrictions that would pave the way for the local issuance of Islamic, or sukuk, bonds that are favored by Muslim investors because they conform to Islamic laws banning interest payments.

The proposed changes being considered in the National Assembly are being blocked by Christian activists who claim that the sukuk bonds are being used to finance terrorism.

Na Seong-lin, a Grand National Party lawmaker and a member of the National Assembly taxation subcommittee found the allegations “absolutely ridiculous” and “lacking any evidence.”

The taxation subcommittee, chaired by Grand National Party lawmaker Lee Hye-hoon, repeatedly delayed finishing a formal review of the sukuk bill, explaining that some sentences in the bill may “give an impression that local companies have to follow tenets of a certain religion.”

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