The Political Economy of Sukuk Development in East Asia: A Comparative Study from South Korea and Taiwan

Sukuk is an alternative financial instrument for investing in the form of bonds. Compared with conventional bonds, Sukuk offers investors an asset distribution model and a fair return of profit and risk-sharing. Sukuk also prohibits the imposition of interest rates. The development of Sukuk in the East Asia region has shown a positive trend because of its profitable principle for medium- to long-term investment in supporting economic development and stability. South Korea and Taiwan are countries that are relatively new in developing Sukuk compared with China, Hong Kong, and Japan. This research aims to understand the development of Sukuk in these two countries from a political economy perspective. This research employs a qualitative method and compares how South Korea and Taiwan implement their policies in developing Sukuk using an approach from three aspects: political leadership, world economic order, and cultural factors. The data to be used is sourced from secondary data from government documents, central banks, and financial authorities.