Lower broadband cost is driving the growth of electronic commerce in the Philippines, according to research firm International Data Corp. (IDC). E-commerce, however, is booming on the business-to-business (B2B) area and not on the consumer side.

According to IDC, the number of Internet buyers is estimated to grow annually at 22 percent while total revenue from e-commerce -- which combine both B2B and B2C (business-to-consumer) revenues -- is estimated to grow annually at 58 percent from 2005 to 2009.

Based on IDC"s latest figures, the number of Internet users in the Philippines totaled 11.8 million in 2004.

E-commerce, meanwhile, is expected to grow due to aggressive broadband price offerings from service providers, particularly of asymmetric digital subscriber line (ADSL) services. The growth is also being encouraged by more varied service offerings in the B2B segment from local e-procurement sites.

As the B2B segment matures, IDC suggests that players in this sector begin looking at introducing service offerings designed for small to mid-sized companies that would allow them to conduct business online.

Payment gateways to accommodate small value transactions (micro-payments) and content services attuned to the inherent needs of this user segment are a few of the necessary components.

Although the B2C segment lags behind, IDC sees significant potential from the consumer segment as long as online retailers are able to identify and deliver the distinct types of access and services that would cater to specific requirements of different consumer types.

To address the much-needed boost of the B2C sector, continued support must be given to developing value-rich content and in establishing security and privacy standards. According to IDC, these are necessary steps as Filipino Internet users continue to grow increasingly receptive to the Internet"s "digital products" such as MP3 downloads, electronic banking, personal weblogs (or blogs) and Internet-enabled purchases, among others.

Although there is significant growth in Internet use and e-commerce, there remain areas for improvement.

Manuel Ravago, IDC Philippines research manager, noted that broader Internet coverage for example, would not only facilitate greater consumer access but also effectively expand the market bases of providers and allow them to offer additional services.

"For Philippine e-commerce, addressing fundamental issues such as payment gateways, provisions for small-value transactions, increasing consumer awareness and confidence, and allaying privacy- and security-related fears can all be catalysts for greater e-commerce uptake," Ravago said.