How a tiny country

bordering Russia became

one of the most tech-savvy
societies in the world
P UB L ISH E D F RI, F E B 8 20194:18 AM ESTUPDATED FRI, FEB 8 20197:09 AM EST

Elizabeth Schulze @ E S C H U L Z E

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VIDEO06:44

How Estonia became one of the world’s most

advanced digital societies
For a small country, Estonia has made a big impression on the global stage.

The Baltic nation of just 1.3 million people has attracted the attention of world
leaders, academics and venture capitalists thanks to its high-tech digital
society.

The numbers speak for themselves: Taxes are completed online in under 5
minutes, 99 percent of the Estonia’s public services are available on the web
24 hours a day and nearly one-third of citizens vote via the internet.

“We have a generation who has grown up knowing that you communicate
digitally with your school because we have an e-school system, with your
doctor because of e-health,” Estonia’s president Kersti Kaljulaid told CNBC in
an interview in Tallinn in August. “You could say the Estonian government
offers what normally only the private sector can offer to people.”

As governments around the world wrestle with challenges from technology

including data collection, artificial intelligence and cyber threats, Estonia might
offer a blueprint for how to build a digital society.
We did it straight away digitally
Kersti Kaljulaid
PRESIDENT OF ESTONIA

When Estonia gained independence from the Soviet Union in 1991, the
country embarked on a series of fast-track reforms to modernize the
economy. From the start, it took a digital approach.

“Estonia was a relatively poor country,” Kaljulaid said. “Our public sector, our
government and our civil servants wanted to offer our people good quality
services. We did it straight away digitally because it was simply cheaper,
easy.”

A key initiative started in education as Estonia pledged to put computers in

every classroom and by 2000, every school in the country was online. The
government also offered free computer training to 10 percent of the adult
population. The effort helped raise the percentage of Estonians who use the
internet from 29 percent in 2000 to 91 percent in 2016.

In 2002, Estonia launched a high-tech national ID system. Physical ID cards

are paired with digital signatures that Estonians use to pay taxes, vote, do
online banking and access their health care records.

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VIDEO03:48

99 percent of Estonia’s public services are online

“Estonians realized because they embraced internet and technology,
business, and everything, is going to move to the internet,” said Tobias Koch,
a business engagement manager at the e-Estonia showroom, a center in
Tallinn that showcases Estonia’s digital solutions. “Instead of just having an
offline ID card, you need something that works online.”

E-residency
Another key feature of Estonia’s digital society is e-Residency, a first-of-its-
kind initiative that allows individuals to start businesses in the country without
living there. The program serves as a launching pad for companies looking to
do business in the European Union (EU) and benefit from the EU’s single
market.
More than 50,000 people from around the world have applied for e-Residency
since it launched in 2014.

“People who have global businesses, have a global lifestyle, they want to be
served, and we want to be the best ones in that area,” Taavi Kotka, Estonia’s
first-ever chief information officer who helped create the program, told CNBC.

Digital nomad visa

Estonia is now building on its success with e-Residency to launch a visa for
digital nomads; employees who work remotely around the world. The visa is
an example of a public-private partnership at work between the Estonian
government and Jobbatical, a cross-border hiring firm.

Karoli Hindriks, CEO of Jobbatical, is working with the Estonian Interior Ministry to launch a digital nomad visa.
Benjamin Hall | CNBC

“What we are doing with the digital nomad visa it really reflects what our whole
immigration policy is about,” said Killu Vantsi, a legal migration adviser at the
Estonian Ministry of the Interior, in an interview with CNBC. “We want to
attract the talented people, entrepreneurs that are beneficial to our society to
our economy.”

Karoli Hindriks, CEO of Jobbatical, said other countries should follow

Estonia’s lead as they face aging populations and a lack of skilled workers.

“The countries that are closing down and not thinking about it, I’m very curious
to see where they will be in 10, 15 years,” she said.

The unicorn king

Efforts like e-Residency and the digital nomad visa, along with business-
friendly tax rates, have helped encourage a start-up culture in the tiny Baltic
nation. Skype, the video chatting service that was bought by Microsoft, was
launched in Estonia in 2003.

Skype was founded in Estonia in 2003.

Benjamin Hall | CNBC
Today, the government boasts it is home to more tech unicorns, private
companies valued at more than $1 billion, per capita than any other small
country in the world. Its recent unicorns include payments firm
TransferWise and Uber competitor Taxify.

Other companies focusing on everything from blockchain to organic food are

now vying to be the next Estonian success.

“The environment they set up right now is really friendly,” said Gregory Lu, co-
founder of Natufia Labs, a start-up that created a machine to grow organic
produce indoors. “I hope they keep it this way.”

Roadblocks
The journey to become a digital society in Estonia hasn’t been without
roadblocks. In 2007, the country suffered a massive cyber attack that brought
down most of its digital infrastructure.

In the wake of the attack, Estonia became home to the NATO Cyber Defense
Centre of Excellence, which conducts large-scale cyber defense drills. The
government also created a data embassy in Luxembourg where it stores
copies of all of its data.

Still, officials were forced to respond to more than 10,000 cyber incidents in
Estonia in 2017. The country’s top banking regulator recently warned online
databases and programs like e-Residency have made Estonia vulnerable to
dirty money and sanctions breaches.

Government officials admit that being a digital society means being prepared
for cyber threats. Kaljulaid said “cyber hygiene” is essential for every citizen.

“You will always be teaching and educating people,” she said. “It’s like
teaching hygiene. You wash your hands because germs spread.”

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How do you stop a cyberwar?