Can Asia copy Estonia’s digital nation model?

By Medha Basu

Exclusive interview with Taavi Kotka, an architect of Estonia’s digital society.

On the surface, there’s little that Estonia and India have in common.

Except that India’s richest person, Mukesh Ambani, has made Estonia the base to chart the future of his tech business, Jio. “Mukesh Ambani wants to build Digital India,” says Taavi Kotka, Ambani’s digital advisor and CEO of the Jio Research Centre.

Kotka made his name as one of the architects of Estonia’s rise to the most digitally advanced country in the world. In an exclusive interview with GovInsider, the former CIO of the Estonian Government discusses why Asian countries are leaders in digital, and what they can learn from Estonia’s success.

Asian countries leading

At the Jio centre in Estonia, Kotka has recruited specialists to study how Ambani’s vision for India can be achieved and explain how tech could change the country. “They know that India will be a digital society during the next decade. They want to understand what it actually means - how it changes people's behavior, how it changes people's mindset,” he says.

Asian countries have a stronger baseline for building digital societies than western countries, because they have unique and universal identities for citizens, he says, like India’s Aadhaar or Singapore’s Singpass. That is “one of the most important core elements to build a digital society.”

These common identifiers allow “digital connections” to be built between people and their data, enabling automated and predictive services like those in Estonia. “This stuff can be built if everybody uses the same unique identifier about yourself.”

Western countries are lagging because they have not created such identities for residents. “There has been a decision that this link cannot be made.”

But without it, governments can't combine information between different sectors and businesses, which also means “they can never enter in the proper digital society”.

These countries, Kotka says, are “hiding” behind the privacy argument. “It's a false argument because if you're not connected, you also don't know who actually has access to your data.”

Scandinavian and north European countries have proven that government systems can be connected without compromising privacy, he adds. The countries allow people to control who has access to their data, with harsh measures for improper access and use. Estonia fires officials who access residents’ records without clear reasons.

Healthcare data in Estonia, for instance, is shared among all doctors so that patients can easily get a second opinion or be moved from one hospital to another. “Covid, I think, showed to the Western world that a change is needed, but I don't know if the pain is enough for them to take action,” Kotka says.

The case for e-residency

Since 2014, Estonia has allowed citizens of other countries to become an “e-resident” of Estonia. They can run an Estonian business or open a bank account without stepping into the country.
It was basically a logical outcome: if you're capable of serving your own diaspora all over the world, then you should ask yourself why you need to serve only your own people.
Can you basically make your customer base bigger? We challenged ourselves with that kind of idea.”

Kotka suggests small nations like Singapore would benefit from the e-residency model. Its small size limits the number of foreign citizens it can allow to physically work in the country. “It's actually smart to connect them strongly virtually, like we do with e-residency.”

With most travel halted over the past year, countries should question whether their talent and businesses should be limited to those in their physical borders. “Governments will start to compete for who gets customers related to their economy or their society, in the same way they compete today about physical talent and tourists,” he says. “Do I need to establish a company in the same location where I physically live? That's not the future question anymore.”

The Jio Research Centre is a model of what the future could be: A tech visionary in Estonia charting the future of India, backed by an Asian billionaire who is also an Estonian e-resident.

70 per cent of Estonia’s e-residents are from within the European Union because of the red tape involved in setting up and running businesses in other EU countries, Kotka says. In Estonia, meanwhile, auditing, taxes and other reporting are automated. “You have to spend very minimally to keep your company up and running, and most importantly you can focus on your core stuff.”

Digital embassies


Another innovation worth copying from Kotka’s career is the digital embassy - essentially a backup of all the digital systems that run the country. “It's my PhD, actually.” “We have to have some backups outside of your physical region that even if there's a major natural disaster or if you have a hostile neighbour, you need to restore a certain status quo.”

Estonia launched its first prototype in Luxembourg. The digital embassy has external computing power and data storage. In case of a disaster or an attack on Estonia, these backup resources can be used to keep digital services running.

“When your country is fully digital, those digital things they need to work - doesn't matter if there was a nuclear attack, or a power plant exploded somehow like in Fukushima, or like you have a cyber attack like we had with Russia in 2008.”

The product owner mindset

The biggest struggle, he says, has been to sell the “product ownership” concept. That means a department in charge of a particular service has to develop it, measure its quality and experience, and improve it constantly.

That mindset is common in tech companies, but “doesn't exist in politics.”

Kotka’s antidote has been to continuously repeat the message and ensure good examples are surfaced. Departments must set KPIs for service quality that they are measured against, he says.

The benefits of a digital nation were not hard to sell to Estonians. Kotka was part of the “second wave” of the nation’s digital architects, who set up programmes like the e-residency.

The first wave in the 90s and early 2000s laid many of the basic elements for a digital society, after Estonia became independent from the Soviet Union in 1991. “During the first wave we had in the beginning of 2000s, people saw the benefits of digital society.”

People started demanding new kinds of innovations, and with this also came an understanding that there could be mistakes made along the way. “They will forgive a couple of mistakes you're making, because they understand that any new innovation … takes time to mature and it means that there will be mistakes.”

Lessons from the pandemic

More recently, Estonia has been recognised for its seamless transition to remote services during the pandemic. There were certainly teething issues, Kotka says. “Let's be honest. Covid also hit us, I mean in the matters of how we operate”, he says.

“Certain working processes needed to be improved, and new habits made, and let's say certain people need to study new tools, etc.” Teachers, for example, had to choose between different video conferencing tools they should use. “But the society didn't stop, it all works.”

The country’s strong digital backbone ensured that the transition took weeks, rather than months. “That's the most important outcome, that we know that the building blocks are there and they're working.” “Working from distance, interacting with the government from distance, interacting with your medical service from distance - it was all there.”

Some Asian countries are already building up key elements like digital identities, and benefits of that could spillover to other areas. “India's problem is bribing and corruption. I really hope it gets better. Digitalisation actually improves that, because you can't bribe a computer,” Kotka says.

Estonia’s success has come from the fact that people inherently trust technology. And to get there, Asian countries must step up security and privacy.