Magazine article New Internationalist

Welcoming the Digital Residents

Magazine article New Internationalist

Welcoming the Digital Residents

Article excerpt

Kushtrim Xhlaki is from a country that doesn't officially exist. His native Kosovo, though recognized as independent by over 100 countries, including the United States, is still considered by others to be part of Serbia. It is, therefore, not a member of the United Nations and is excluded from the International Organization for Standardization (ISO) list of countries.

Not having a spot on this list has radical consequences on the internet, because it is used, by default, by many companies in their country drop-down menus for things like credit-card transactions. Trying to buy something online? You will be asked what country you're in. For Kosovars, the shopping spree often ends there.

But Xhlaki didn't want to buy a sweater from Amazon; he wanted to start a tech company. Unable to do business over the internet because of his ISO problem, the only option was to incorporate elsewhere. Setting up shop in a place like Macedonia, Lithuania or Albania would have meant a lot of travel, expense and time - and vulnerability to the political tides of a country not his own - but at least he would have been able to get paid.

A nd then the small Baltic nation of Estonia started testing a programme that would disrupt the boundaries of online commerce.

Estonia is one of the most digitally advanced countries in the world; each resident has a verified online identity with which their interactions with the state can be handled over the internet. Taxes, for example, are calculated by the government and paid with a few clicks of the mouse. Voting is similarly straightforward.

No borders

In 2014, this country of approximately 1.2 million wanted to increase the size of its economy. With the birth rate in decline, the government had a radical thought: why not try to grow the population digitally?

'When you have a digital society that really functions, then there is no point to having borders on the internet,' says Kaspar Korjus, Managing Director of the Estonian government's e-Residency programme. 'We can offer to foreigners the same product we offer to Estonians.'

Without being certain of exactly how the new programme would work, the Estonian government set up a simple launch page for something it called 'e-Residency'. Within the first 20 hours of the page being live, over 4,000 people had registered.

'Then we realized that there was much bigger potential,' says Korjus.

After submitting an application that requires an in-person visit to an Estonian embassy, e-Residents receive a digital ID with which they can open Estonian bank accounts, set up Estonian companies, and digitally sign documents remotely over the internet.

For Estonia, the programme brings in new customers for local industries that support entrepreneurship, like the financial services sector, and generates good publicity by promoting the country's start-up scene. Estonia does not generate income by taxing e-Residents, who pay corporate taxes in their countries of physical residence.

For Kosovars like Xhlaki, this service was a game changer. Where before it was difficult to use basic online tools like PayPal, with e-Residency Xhlaki says he 'can participate in the whole digital euro market, rather than dealing with different currencies, travelling to neighbouring countries, and opening legal entities for each in order just to receive money from customers'. …

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