The government has been urged to set up a National Economic and Social Safety Net Fund (NESSFUND) as an alternative source of funding in a bid to curb COVID-19's impact on the people and the economy.

The Malaysian Islamic Chamber of Commerce economic advisor Datuk Abd Aziz Abu Bakar, in his personal capacity, proposed that business entities contribute to the fund to be utilised for social safety net initiatives in the country.

In return, he suggested, the government would give them double deduction tax incentives under the Income Tax Act 1967.

“Under the current tax policies and measures, companies are getting allowable or approved donation tax deduction but it is capped at about 10 per cent of their aggregate income. So, the relief is quite limited for them to donate and contribute to the fund.

“That is why we suggest the double deduction tax incentives. This will at least entice the business community to contribute and we also advise that the fund be managed by the Finance Ministry,” Abd Aziz said during a webinar titled “COVID-19 Safety Net for People and Economy - How to fund it?” organised by the Malaysia-China Chamber of Commerce today.

Abd Aziz, who is also the president of the Malaysian Association of Tax Accountants, encouraged approved institutions and organisations under Section 44(6) of the Income Tax Act 1967 to donate to registered foundations to further support social safety net initiatives in Malaysia.

“When they donate to the foundations, specifically for COVID-19 relief, they would be also given a double deduction tax incentive,” he added.

He said at present, the government was utilising funds that could have an impact on its fiscal position.

“We are not overly concerned about the fiscal position because the funding and the spending by the government is to help the people and the business community.

“(However), there would be a decrease in the Social Security Organisation’s (Socso) fund and the Employees Provident Fund’s (EPF) members’ retirement savings,” he said.

It was reported that RM1.9 billion worth of monthly withdrawals had been approved via the EPF i-Lestari facility as of May 31.

In addition, Abd Aziz also recommended that insurance companies look at providing business interruption insurance coverage for the businesses, among others, to cover profits that would have been earned normally and to cover fixed cost and other costs incurred by them during the business interruption period.

Abd Aziz also encouraged businesses to contribute for corporate waqf -- donating assets such as land, building, equipment like medical equipment and cash for charitable purposes.

“Each and every one of us -- as an individual, a business entity and (member of the) government -- must learn from the COVID-19 experience.

“We need to have enough reserves for unforeseen circumstances and need to prioritise social and economic matters above politics,” he said.

-- BERNAMA