Securities regulators in Thailand expect the country to make its debut sukuk issue in the first quarter of 2010. The Securities and Exchange Commission (SEC)is currently working towards the finalisation of rules for sukuk structures.

Dheerasak Suwannayos, President of the Islamic Bank of Thailand is reported by Bangkok Post as recognising that Islamic finance has expanded a lot as an industry in recent years and is now a key component of the global financial system. There is currently in excess of US$80 billion in sukuk instruments outstanding. The SEC cites Malaysia as the biggest sukuk market in the world at the moment.

Dheerasak pointed out that sukuk are open to both Islamic and non-Islamic investors, typically offering greater transparency than conventional bonds. He added that recent sukuk deals have been able to secure funding at 25 to 50 basis points cheaper than conventional bonds, thanks in part to higher investor demand. He stated, "no one knows really how big the petrodollar market really is. We think it may be larger than the US dollar market."

Dheerasak believes there is no reason why Thailand cannot eventually challenge Malaysia's position as South-East Asia's top Islamic finance hub. He says, "We have a number of top international banks, banks with experience in Islamic finance such as Citibank, HSBC and Standard Chartered with offices in Thailand. I believe that we have strong potential to become an Islamic financing hub as well. It all depends on government policy."

The development of an Islamic finance industry in Thailand has hitherto been hindered by tax codes that classify returns from sukuk instruments as rental revenues, therefore making them subject to a 12% property tax. Transfers of land or real estate assets to a Special Purpose Vehicle is taxed as a land transaction. A new trust law for capital market transactions, however, will eliminate such obstacles, paving the way for sukuk issuances.