The IAIF, in line with its 10th annual conference, held the 3rd pre-session of the conference on The Effect of Designing New Islamic Financial Instruments and Products on Production Leap, on December 16, at 2:00 PM Iran standard Time.

The speakers were as follows:

1- Dr. Majid Pouyanmehr, Secretary of Shariah Board, Securities and Exchange Organization (SEO), Member of IAIF, Iran

2- Dr. Jamil Anwar, Assistant Professor and Member Center of Islamic Finance at COMSAT University (CUI) Abbottabad Campus, Pakistan

3- Dr. Nazrul Hazizi Norrdin, Assistant Professor and Head of Industrial Linkages at the IUM Institute of Islamic Banking and Finance, Malaysia

Dr. Jamil Anwar, Assistant Professor and Member Center of Islamic Finance at COMSAT University, Pakistan

The aim of the presentation was to explore the potential of Islamic finance to drive economic growth, particularly in enhancing production and fostering innovation. Keeping in view the huge gap between the global demand and potential offerering of Islamic products, it was recommended the development of innovative Shariah-compliant financial instruments such as modified Musharaka and Mudarabah contracts tailored to meet the needs of Small and Medium Enterprises (SMEs) and individuals.

These instruments address financial barriers by enabling risk-sharing, providing flexible capital, and ensuring ethical financing practices.A core focus was placed on engaging youth and SMEs through Islamic fintech solutions.

By leveraging technology, financial institutions can empower young entrepreneurs to develop Shariah-compliant IT solutions that streamline access to funding, project monitoring, and profit distribution. Such innovations bridge the financing gap while promoting transparency and efficiency.

The role of central banks was underscored in facilitating growth by creating regulatory sandboxes, supporting Islamic fintech startups, and establishing comprehensive frameworks to ensure compliance and innovation within the Islamic finance ecosystem.The discussion further connected these advancements to the broader halal economy with sectors like halal food, pharmaceuticals, cosmetics, and tourism driving economic opportunities.

Islamic finance serves as a catalyst, offering ethical funding to support industries while aligning with Sustainable Development Goals (SDGs), particularly poverty alleviation and economic inclusion.It is concluded that Islamic finance—through tailored products, digital innovation, and central bank support—can unlock significant growth, particularly in Muslim-majority economies.

The integration of Shariah principles with technological advancements positions Islamic financial systems to achieve a production leap, benefiting economies globally.

Dr. Majid Pouyanmehr, Secretary of Shariah Board at Securities and Exchange Organization of Iran (SEO) , Member of IAIF

At first he said significant increase in a company's manufacturing capacity or efficiency, often achieved through technological advancements, process improvements, or strategic investments. By production leap, organizations can streamline workflows, reduce lead times, and ultimately boost output without compromising quality. Such transformations may involve adopting automation, upgrading equipment, or re-engineering processes, positioning the company for sustainable growth and increased profitability in a dynamic market landscape.

He went on to say that financial requirements for production leap are Initial Investment Costs, Operational Costs, Working Capital and Contingency Funds. Pouyanmehr added Musharakah based contracts can facilitate a production leap by providing the necessary capital, sharing risks, enhancing expertise, expanding market reach, and promoting sustainable growth. Pouanmehr emphasized that main elements in Musharakah are Shared Capital Investment, Risk Sharing, Access to Expertise and Sustainable Growth.

Regarding crowdfunding and its relationship with production leap the speaker said we can consider 4 pillars for it as follows:

INTEGRATION: Crowdfunding integrates investors’ desires with financial needs of producers,

PERFORMANCE: Crowdfunding improves assessment areas for both engaged parties in production leap,

DATA: Crowdfunding enables producers to gather financial resources as investors prefer,

COLLABORATION: Crowdfunding authorizes both engaging parties for production leap

Somewhere else he touched upon sukuk issuance and its effect on production leap, saying several types of Sukuk such as Murabaha, Ijarah, Istisna will benefit the society in Shariah compliant structure. They will permit companies to answer their financing needs both in fixed cost or variable cost and subsequently lead to production leap.

Dr. Nazrul Hazizi Noordin

Assistant Professor and Head of Industrial Linkages IIUM Institute of Islamic Banking and Finance International Islamic University, Malaysia

Innovation in Islamic Finance and Production Leap

The presentation highlights the imperative of positioning climate efficiency as the next critical dimension of a production leap in the 21st century, moving beyond traditional approaches focused solely on profit maximization. With the planet facing unprecedented warming, climate efficiency—a concept centered on achieving economic growth and enhanced productivity while minimizing environmental impact—has become essential. This entails reducing carbon emissions, conserving natural resources, and adopting ethical practices.

Realizing this vision necessitates innovative and impactful funding strategies, with climate finance playing a pivotal role by mobilizing resources to support climate-resilient initiatives. Islamic finance, with its inherent emphasis on environmental stewardship, is uniquely positioned to advance the climate finance agenda.

The presentation outlines four strategic pillars to foster Islamic finance innovation for advancing this kind of production leap.

The first, Promoting Purpose-Driven Finance, underscores the importance of sustainability-linked financing, where financial terms are tied to achieving predefined environmental performance targets.

The second, Scaling up Alternative Financing, advocates for funding models that shift focus away from debt-financed short-term gains, often associated with polluting industries like oil and gas, towards sustainable and resilient investment options.

The third pillar, Leveraging Financial Technology, emphasizes the potential of artificial intelligence and data-driven insights to identify, incentivize, and scale climate-efficient initiatives.

Finally, the fourth pillar, Mainstreaming Islamic Philanthropy, integrates classical Islamic social finance instruments—such as zakat, waqf, and sadaqah—into modern financial solutions. This approach creates innovative blended finance mechanisms that pool resources from diverse sectors and stakeholders to drive positive environmental outcomes.

By adopting these strategies, Islamic finance can play a transformative role in fostering climate efficiency, aligning economic growth with sustainability, and addressing the pressing environmental challenges of our time.