(UPDATES) MALACAÑANG has ordered tariff cuts for rice and other key commodities in an effort to keep prices low and inflation under control.

President Ferdinand Marcos Jr., through Executive Secretary Lucas Bersamin, on Thursday approved Executive Order (EO) 62 to formalize changes to the 2024-2028 tariff program.

Earlier this month, the National Economic and Development Authority Board chaired by Marcos announced that the "strategic" move would ensure access and affordability of essential goods and at the same time balance the interests of consumers and domestic producers.

Among others, the import duty on rice — blamed for rising inflation — was slashed from an already lowered 35 percent to 15 percent.

Reduced tariffs on corn, pork and mechanically deboned meat that were originally set to expire at the end of this year via EO 50 were also extended to 2028.

This June 21, 2024 photo shows rice for sale at a market in Manila. PHOTO BY J. GERARD SEGUIA

The reduced rice tariffs will take effect in 15 days from the June 20 publication of EO 62 while the rest of the approved revisions become enforceable in 30 days.

"There is a need for a new multiyear and comprehensive tariff schedule that will provide a transparent and predictable tariff structure, and allow businesses to engage in medium- to long-term planning to improve productivity and competitiveness, facilitate trade and enhance consumer welfare," EO 62 states.

"The implementation of an updated comprehensive tariff schedule aims to augment supply, manage prices and temper inflationary pressure of various commodities, consistent with the Philippine national interest and the objective of safeguarding the purchasing power of Filipinos," it adds.

Analysts said the move could lower inflation significantly but warned of the long-term impact on farmers.

Security Bank Corp. chief economist Robert Dan Roces said that while estimates showed that inflation could drop by 0.4 to as much as 1.8 percentage points, this would depend on the extent and speed of adjustments in domestic rice prices.

Inflation, which picked up to 3.9 percent last month, could potentially hit 2.0 percent, HSBC Global Research economist Aris Dacanay said, at the bottom end of the central bank's 2.0- to 4.0-percent target.

It might drop even further if global rice prices also concurrently decline, he added.

"The tariff cut would also negate the inflationary impact of Executive Order 50's expiration in 2025," Dacanay continued, noting that the tariff on out-quota rice imports would have risen to 50 percent.

"That said, investors will need to monitor the implementation of the policy since its timely and successful implementation could vastly change the inflation outlook, and thus, the policy rate outlook."

Roces, meanwhile, said the quick approval of the new tariff schedule "could lead to quicker relief, but long-term effects on farmers and the need for complementary measures require further national government action..

Speaking at a Manila Times economic forum on Thursday, Philippine Chamber of Commerce and Industry Vice President Jude Aguilar said the tariff cuts were a "temporary solution."

"Right now, we are addressing the problem that there's a lack of supply, and we may need that. I think they foresee several crises coming in ... I think that it's just a temporary solution or a band-aid to address our food security issues," he said.

"[I]t's a band-aid that they intend to last for four years ... does it need to be that long?" Aguilar added.

The PCCI will look at the "scope ... the landscape and then we will have to advocate. We will have to work with the government. And we will have to discuss and see if, let's say, there are better ways to solve that issue."