Estonia and Singapore: Cooperation between two ‘digital tigers’

With a population of 1.3 million people, Estonia—a member of the EU, NATO and OECD—is one of the world’s most advanced digital societies. Estonia also has the most number of unicorns per capita in Europe.

Estonia opened its first embassy in the region in Singapore in February 2021 to further strengthen and grow its digital prowess, education and research through partnership and cooperation between the two nations. We speak with Priit Turk, Estonia’s first resident Ambassador to Singapore, on how Estonia encourages and nurtures the growth of startups; the challenges faced by small nations; and how digital governance and cooperation can benefit both Singapore and Estonia.

Unravel: Estonia boasts a robust startup ecosystem. What are some factors that have contributed to its success?

Priit Turk: Estonia is sort of a startup itself – small, innovative, agile, offering new solutions and a “testbed” for the world in areas like digital governance. The startup culture is very visible and an increasingly important part of our economic set up. Estonia is a small country, but we have a proportionally high number of people involved in the IT, tech and startup sectors and increasingly more talent from abroad as well. For example, in 2021 the turnover of startups increased to €1 billion – an increase of nearly 50% compared with 2020.  

Today’s success and vibrant business environment is largely due to the right efforts of the Estonian government in the 1990s to reform the country. Some choices were similar to what Singapore made in the early days of its independence. For example, rather than radically opening up to the global economy, being tiny countries we have to be able to offer something unique and attractive for investors. And this is due to the smallness of our internal market, so our companies have to always produce with an aim to export. That’s why Estonia has prioritised a liberal business-friendly environment to be competitive based on three principles: simple, safe and fast. So, for instance, our tax system is number 1 in the world – it’s flat and simple, everything is digitalised and there is no tax on enterprises if profits are reinvested.

Like Singapore, Estonia too has a world-class educational system. We have highly educated and also entrepreneurially motivated people, who are eager to do something themselves. During the Soviet system—where everyone worked for the communist state—there was little incentive to be creative. So, our achieved freedom was also very much channelled into having an entrepreneurial and “let’s do it” mindset among the people.

Probably the trigger for our startup mindset was the creation of Skype. In early 2000s four Estonians founded Skype and they brought in Swedish and Danish investors, who believed in their solution. It was a huge boost for the development of the Estonian startup ecosystem, as it gave way to the belief that not size but the idea matters. As Estonians, we learnt to believe that you can do globally relevant things and export solutions with less resources and fewer people. Once Skype was bought by Microsoft, the founders of Skype started reinvesting in their own and other Estonian startups, and also supported IT education in Estonia, furthering the growing ecosystem. This very close community feeling, where unicorn founders support and inspire newcomers through mentoring, investments, or co-founding new startups is key to the growth of Estonia’s startup sector.

This could all evolve because of well-developed digital infrastructure. Estonian leadership in the early 90s quickly realised that technology offers the only opportunity, if Estonia ever wants to catch up with the Nordics. Some very visionary decisions were made, like every Estonian citizen got a unique ID number, which enabled to create a unique digital ID for everyone – thus helping build a digital society.

It was supported by investments in IT education. In the late 90s, we developed a programme called the “Tiger Leap”, a collaboration between the government and the private sector. Every school was connected to the internet and students were taught IT courses, including code writing skills. So, by early 2000s, all our schools had a very strong IT component. 

Also a good mutual understanding of the importance of digitalisation between the government and the private sector was there from the very early days. The business sector pushed the government to go forward on digitalisation and was also the main partner for developing digital solutions. This built a lot of trust towards the government in terms of e-services. Estonia enjoys very high trust towards the government’s digital services or e-governance. Trusting your health data online and conducting i-voting for elections are good examples of public trust. 

Unravel: What are some key areas of cooperation between Singapore and Estonia (now and in the future)? 

Mr Turk: Both countries have very vibrant startup ecosystems and communities. Some Estonian startups and unicorns like Wise (former Transferwise) are already here to explore possibilities from both sides in fintech, greentech, edutech and cybertech, to name a few. Due to similar open business environments, size and special location we have the potential to elevate cooperation to new levels. Estonia could be the testbed and a gateway to the European Union (EU) for Singaporean startups, and Singapore a gateway to Southeast Asia for Estonian startups.  

Both countries have developed many formats of accelerators, testbeds and different ways to energise our startup ecosystems and attract new talent. Estonia, for example, has an e-residency programme and also a startup visa programme. Once you are motivated to start your company in Estonia, you can apply for e-residency, which enables you to start a company in the EU by using Estonian digital services without changing location. Further, in 2021, the Estonian government launched the Digital Testbed Framework, which gives companies all over the world access to the government’s original tech stack to build new innovative web and mobile applications. Users will also get an opportunity to test it against a government framework and get the proof of concept, before using it for their own commercial solutions. The Estonian government gets the solution for free use and it will be part of the publicly available source-code repository.  

Based on strong digital infrastructure in both countries, I see potential to make our startup ecosystems and services much more intertwined, including making our e-ID systems interoperable.

Estonia and Singapore already work closely to keep our digital societies secure – including at the international level on cybersecurity, because both nations know very well from hard experience that you can only have digital services and fully digital societies if your systems are backed up with update security systems.

In the future, I believe that bringing artificial intelligence solutions or opportunities for a digital society and e-governance will be areas we will work more closely with Singapore.

Unravel: What are some challenges that countries with small populations face?

Mr Turk: We like to think that our small size is actually an advantage. We work on this and strengthen our advantages – simple, agile and fast ecosystem. For example, Estonia with its advanced digital infrastructure and regulatory environment is an excellent testbed for innovations.

However, there are challenges that especially small countries face, such as a constant shortage of people and how to economically expand and scale your companies. So, the solution is to stay attractive for your own talent, invest in future talents and work on inviting talent – using for example e-residency or by offering good quality of life and services. 

The second challenge is the smallness of the domestic market. However, in Estonia’s case we have always had in mind that you have to produce a high-quality product or service to be able to sell it to the European and global market. So, tendencies of protectionism of markets, which we have experienced in recent years, are not beneficial for us.

Unravel: In your view what makes for a successful digital society? Is it top down, or bottom up?

Mr Turk: The key is that digital solutions have to make people’s everyday lives easier and there has to exist trust in the system. In Estonia, for over 20 years, citizens came to appreciate the e-services and saw they were secure and efficient. This guaranteed wider uptake of all government-provided online services and is the base of our digital society today.

It was important to get some of the basic and most common services online. For example, paying for parking in Tallinn, which is not a big city, was not efficiently organised and the system was expensive to run. But from 2000, when the m-parking (mobile parking) system was implemented, it became easy and was almost instantly used by many. Most government services have been online for 15 years – such as reporting taxes, voting, e-schooling, health data and traffic records.  

Unravel: Related question. Can you tell us about the importance of e-governance and digital solutions at a national level?

Mr Turk: As Estonians, we are a bit spoilt already. As most e-governance services have been around already for so many years, Estonians tend to take digital services as a basic right and we complain loudly if something does not work properly. I think it’s good we continue to be ambitious.

For us it’s natural, that your interaction with government or a service provider, or with schools or with doctors all happen online. Amid the pandemic, for instance, schools were physically closed and moved online, but our teachers and students were very well prepared as digital classrooms and online teaching materials were already in place and accessible to all.

Undoubtedly, the most important factor of our e-governance system is the high trust towards the government and how our data is protected. The government has always had an honest and transparent approach. If they know that there is a threat or weakness to the system, then it’s shared with the public (of course the threat is taken care of as well). The important aspect is that citizens have assurance that they own their personal data. I can always control online if and who has looked at my personal data. Public officials cannot look at or use this data without justification. So, that’s why trust is a very crucial part of any e-governance system.

Unravel: How long have you been in Singapore and what are a few of the things you like most about the country?

Mr Turk: I have been here now for six months. I have my family, a wife and two sons with me. Despite COVID-19 restrictions, we have still been able to discover the beauty of Singapore.

Estonia is a land of forests and wild nature, and we love being outside. Singapore has surprised us very positively with how green the city is and the many green spots preserved in such a densely populated island. We have been enjoying all the different multicultural sides of Singapore – in hawker centres, in museums or through observing celebrations of the different ethnicities and religions in Singapore.