Islamic bond sales from Turkey are picking up pace after the government changed its tax law to apply the same rates to sukuk as non-Islamic debt. The tax measures passed in two stages this year will attract more issuers in Turkey to sell sukuk, said Ali Sanver, partner at Istanbul-based law firm Pekin & Pekin, which was among firms that advised the government. The ruling Justice and Development Party is pushing to assert the country's Islamic identity and revive historical ties to Arab countries after almost eight decades of secularist control. “Turkey is a rapidly growing emerging market, and it's attracting attention,” Jarmo Kotilaine, chief economist at Jeddah-based National Commercial Bank said. Gross domestic product may expand 6.6 percent this year, more than any emerging economy in central and eastern Europe, according to the International Monetary Fund. Dollar-denominated sukuk will receive wider demand than debt offered in lira because foreign investors may be “deterred by the exchange rate risk,” he added. Two banks, Asya Katilim Bankasi AS and Albaraka Turk Katilim Bankasi AS, plan to sell as much as $500 million in Shariah-compliant debt after Kuveyt Turk Katilim Bankasi AS, a unit of Kuwait Finance House KSC, offered $350 million of five- year sukuk Oct. 20. The government passed a law in February reducing the withholding tax on sukuk to 10 percent and exempted sales from value-added, stamp and corporate taxes, Osman Nihat Yilmaz, assistant secretary general of the Participation Banks Association of Turkey, said by phone. The law applies only to Ijarah sukuk, which are based on a sale and lease agreement. Legislation two months later exempted sukuk certificates with a minimum tenure of five years from taxes on revenue. Notes with shorter maturities are subject to a tax rate ranging from 3 percent to 10 percent, putting them on par with non-Islamic bonds. Turkey's improved ties with the Arab world are encouraging more investors to seek a foothold in the country with a population of about 80 million people, almost all of whom are Muslim. Sharjah Islamic Bank, a United Arab Emirates lender, may buy or establish a unit in Turkey, Deputy Chief Executive Officer Ahmed Saad, said. Turkey's trade with the Middle East and North Africa has surged six-fold since Prime Minister Recep Tayyip Erdogan's party came to power in 2002, reaching $30 billion last year. “I don't think this will turn into a campaign but the share of the Middle East and Africa in Turkish exports will definitely increase,” Yarkin Cebeci, a JPMorgan Chase & Co. economist in Istanbul, said.