The South Korean government has been preparing for years to introduce sukuk, or Islamic bonds, to the local capital market. The lengthy effort, however, is proving to be fruitless as it stumbles on an unforeseeable obstacle: the conservative churches, among the biggest supporters of the President Lee Myung-bak administration, are opposing sukuk with all their might.
The conservative church leaders, however, have been vehemently against the idea. Most of all, they believe that sukuk is dangerous money; they suspect that part of the profit from sukuk may be used to support fundamentalist Islam terrorism. They argue that most other countries that conduct sukuk don’t exempt tax from the transaction, and criticize the Korean government for giving undue favors.
Ardent Christian lawmakers like Rep. Lee Hye-hoon of the governing Grand National Party are fiercely opposing the bill, while other neutral lawmakers are reluctant to deal with the issue on fears of losing the Christian vote. Since President Lee Myung-bak is a presbyter and a large part of his victory in the presidential election is due to the Christian community, he is remaining silent about the issue.