CamDX is Cambodia’s national data exchange solution – and it’s based on X-Road®

After touching land in Japan for a private sector use case, X-Road is now being utilised also in East Asia’s mainland – precisely, in the Southeast of the continent. Public administration in Cambodia is currently deploying the open-source data exchange layer to bridge silos between ministries and government agencies.

This comes at the hand mostly from one person with his team: Dr Nguonly Taing, Executive Director at the Techo Startup Center. Car metaphors run fast in this case study, as Dr. Taing takes us through the process of getting to know and utilising X-Road in the Cambodian instance.

CamDX is a “superhighway”, he says. Beginnings, framework development, roll-out – a journey into how the Southeast Asian country built “digital roads” between information systems and stakeholders, significantly improving citizens’ experience in public service access and usage.

Background and institutional framework

The Techo Startup Center, under the realm of the national Ministry of Economy and Finance, acts as a pivot, facilitating agreements and collaborations across various ministries and sectors on digital topics. Like in many other countries, it is an entity that underscores public commitment to driving national digital transformation. It was logical, then, that the development and management of an interoperability layer for data exchange would fall among its prerogatives and priorities.

However, the turning point in the roll-out of such a platform was Dr Taing's visit to Estonia in June 2019. It inspired adopting a data exchange layer similar to the Estonian X-Road instance X-tee, capable of unifying and securing the exchange of data across government agencies to facilitate business operations​​​​.

“During our extensive training in Estonia, we recognized the potential of adopting X-Road to address our challenges with system fragmentation. Given its scalability and security, proven by Estonia and Finland, X-Road was the optimal solution for Cambodia. Although we lacked certain components like public key infrastructure and a single sign-on system, we were determined to develop these independently, reinforcing our commitment to building a resilient digital ecosystem,” Dr Taing explains.

Since then, the center has been crucial in forging agreements and collaborations across different government agencies and the private sector. By enabling these connections, Cambodia Data eXchange (CamDX) is the backbone for a more integrated and efficient digital government ecosystem, addressing the fragmentation that previously characterised the Cambodian public administration​​​​. Dr Taing highlighted the importance of regulatory support in enabling these collaborations, particularly through MOUs that formalise participation in the CamDX ecosystem​​​​.

Needs and challenges

CamDX, in fact, originated from recognising the need to enhance Cambodia's overall competitiveness in providing public services for businesses. The extensive waiting times required for obtaining various licenses and clearances from multiple ministries were identified as significant barriers to improving business competitiveness within the country. These waiting times could extend from 30 to 60 working days.

For reference, the list of ministries and agencies businesses were required to interact with included the Ministry of Commerce, the Department of Taxation under the Ministry of Economy and Finance, and the Ministry of Labor and Vocational Training. Each of these operated in a siloed manner​​.

Within such an assessment, CamDX's creation had to fully align with Cambodia's broader digital governance and economic policies. Dr Taing emphasised the necessity of data exchange, eKYC (Electronic Know Your Customer), and digital identity systems as foundational elements for implementing these policies effectively. CamDX is the infrastructure facilitating these components, albeit with ongoing efforts to fully realise a comprehensive digital identity framework within the country​​. Additionally, the involvement of the Ministry of Interior allowed for the integration of the national ID system, enhancing identity verification processes essential for both public and private sectors​​​​.

The solution

In 2020, Cambodia deployed the open-source X-Road code, leading to the creation of CamDX. This move was not about establishing mere technical integrations, but fostering a community specific to Cambodia, encompassing both public and private sectors locally​​.

Dr Taing likens CamDX to a "superhighway," where data flows securely and efficiently between entities – a bit like cars travelling from place to place along a highway. “Its design ensures security through encryption, digital signing, and timestamping for each transaction. Notably, the content of the data exchanged remains private, as only metadata is accessible to the operator of CamDX. This feature, alongside support for various connectivity options such as VPN or dedicated lines, caters to diverse security preferences among the ministries and other entities involved. It highlights CamDX's robustness and flexibility, making it a cornerstone of our digital infrastructure,” Dr Taing says.

The online business registration platform was one of the first significant services CamDX enabled. With CamDX, all relevant processes and necessary steps were consolidated into a single portal where citizens could file applications and pay fees online, and the data would be distributed via CamDX to the respective ministries for approval​​. “Currently, CamDX enables around 20 services online, signifying just the beginning of its capabilities. Last month, CamDX processed 1 million transaction requests for open eKYC services alone, allowing banks and MFIs to utilise a unified data source,” Dr Taing highlights.

Through the data exchange layer, Cambodia is committed to adopting global best practices in technology for national benefit, overcoming infrastructure and trust barriers, and paving the way for a more interconnected and efficient digital future. Further expansion is among the next steps. “Integrating the private sector, especially banks, into CamDX presented unique challenges, notably due to their strict security standards. However, CamDX successfully passed all tests, demonstrating its compatibility with both open-source and enterprise-level IT infrastructures. It’s an achievement that spotlights our system's adaptability but also the importance of having a robust monitoring system to ensure seamless and secure data exchanges across all sectors.”

In November2022, CamDX was announced as the winner of the ‘open source adaptation of the year’ award in a competition co-sponsored by the United Nations Development Program (UNDP), the Amazon Web Service Institute, and the Global Network for Apolitical Government. 

Launching citizen-oriented digital services in Colombia

Colombia is about to reach a notable milestone in its digital transformation, with the launch of its first citizen-oriented digital public services. Over the past twenty years, the country has become one of the regional leaders in e-government. But to become truly digital, Colombia has had to move beyond the digital replication of analogue processes towards a more user-driven approach to meet its citizens' needs.

The upcoming launch of the first citizen-oriented digital services represents a monumental step towards this goal. Gerardo Cubides Silva, IT Project Manager at the National Digital Agency of Colombia, tells us about X-Road's role in these broader digitalisation efforts, highlighting some of the challenges they had to overcome over the past few years. 

BACKGROUND AND INSTITUTIONAL FRAMEWORK

The government of Colombia recognised the value of emerging technologies already in the early 2000s. The first steps towards digitalisation consisted of drawing up the national Connectivity Agenda and Online Government Strategy to build a more efficient and participative state through the implementation of ICTs (OECD, 2017). 

According to an OECD report from 2018, the government's early efforts set out well-defined strategic directions and established a sound regulatory framework conducive to digital development. But despite this shared direction, public institutions moved forward in silos while lacking a citizen-centred approach. The Digital Citizen Services initiative (Servicios Ciudadanos Digitales) aims to address this gap. 

"In Colombia, the implementation of X-Road is a part of the government's long-term endeavour of digital transformation," Gerardo Silva notes, locating the role of X-Road within broader strategies. In May 2020, these efforts were reaffirmed by Decree 620/2020. Issued by the national government through the Ministry of Information Technology and Communications, the decree establishes the regulatory foundation for the roll-out and use of the tools under the Digital Citizen Services model.

NEEDS AND CHALLENGES

Although Decree 620/2020 represents one of the most recent legislative developments, the implementation of X-Road already started a few years ago. As interoperability falls under the National Digital Agency's competence, in 2018 the entity was responsible for an evaluation process of three interoperability technologies.

In the eyes of Colombia's public sector, Silva explains that X-Road was the best fit for their need to fulfil four main criteria:

1.     Architecture – in terms of usability, availability and reliability;

2.     Security and trust;

3.     Performance in terms of scalability;

4.     Operation in terms of support, maintenance and licensing.

But finding the right technology is just a prerequisite for successful implementation. Since 2018, the National Digital Agency has been working on overcoming a number of challenges that have emerged in the actual process of X-Road implementation. "The challenges that we encountered can be divided into four areas," Silva observes.

"First, we had to embark on a learning curve to really grasp how the X-Road platform works before integrating it into our systems," Silva explains. "Once we had laid this foundation for ourselves, the second challenge was figuring out how to pitch the technology to other public entities and encourage its adoption across the sector," he continues. 

Against the background of this ongoing communication, the third challenge emerged with Colombia'scertification authority, ONAC. "The previous model of digital certificates required us to share user data, such as the username and password, in order to consume the trust services. As X-Road does not support this, we had to modify the system to meet Colombia’s national security requirements," Silva outlines.

The final and ongoing challenge lies in integrating different public sector information systems and services with the platform. "This requires a notable degree of development on the part of all the public entities themselves, so this endeavour takes some time and still continues," Silva concludes.

THE SOLUTION

Colombia's e-government model consists of three vital components: digital authentication, the Digital Citizen Folder, and interoperability. "The Digital Folder enables citizens to file and access digital documents – such as birth certificates, disciplinary records or proof of residence – for their interactions with public institutions," Silva explains. Reliability and security are ensured by the electronic authentication system and the X-Road secure data exchange platform.

But as the initial hurdles have been successfully overcome, the first digital services in the Digital Citizen Folder are ready to be launched in spring 2021. "We are first planning to launch ten procedures for the citizens, including the validation of education documents for studying abroad as well as the consultation of cadastre certificates and proof of residence. Additional services are to be added in the near future," Silva states.

Within the Digital Citizen Services model, X-Road plays a crucial role in ensuring secure and seamless data exchange between different public entities for validating citizen information. In the Colombian context, X-Road meets all the basic requirements outlined and represents an opportunity to get past the previous siloed network and make public entities interact. Colombia's experience illuminates how X-Road can support the harmonisation of public sector operations, forming the foundation for citizen-oriented digital services and the consolidation of a truly digital government.

Estonia and Finland launch automated data exchange between population registers

In September 2020, cross-border interoperability between Estonia and Finland took another step further with the launch of automated data exchange between the countries’ national population registers. With the support of X-Road, the solution replaces the previous batch data processing and improves information accuracy and security.

Automating the exchange of population data is the third cross-border interoperability link in place between Estonia and Finland, after connecting the countries’ business registers and tax boards in 2019.

Together with Timo Salovaara, Deputy Director General at the Finnish Digital Agency (DVV), we outline the main features of the cooperation and solution at hand.

BACKGROUND AND INSTITUTIONAL FRAMEWORK

The exchange of population data between Finland and Estonia dates back to the signing of a collaboration agreement between the countries’ population register authorities in 2005. The document provided a framework for the exchange of details of citizens living in the other country, when and where necessary. Relevant subjects cover the following:

1)    Deaths

2)    Name changes

3)    Changes of address

4)    Information on their dependent children.

The collaboration created a framework that has enabled batch-based data exchange between Finland and Estonia for almost 15 years, with data being requested and provided on average once a year.

The increasing digitalization of the Finnish population register, and the national data exchange layer, have now led to a partial institutional overlap. Automating the existing collaboration seemed, logically, the next step. “The DVV is the owner of the population register in Finland and, since 2014, we also own the national X-Road infrastructure – the Suomi.fi Data Exchange Layer,” Salovaara explains. “So, with the existing data exchange framework that we have in place with Estonia, these two things meet here,” he observes. 

The technical foundation for cross-border interoperability between Estonia and Finland was established in 2018 with the federation of the two countries’ national X-Road. While connecting the national ecosystems paved the way for an array of technical possibilities, their development and implementation have been dependent on resolving legal intricacies. “Despite this, we decided to use X-Road to update the information exchange system from 2005, as we already had the legal framework in place,” Salovaara states. 

NEEDS AND CHALLENGES

Data exchange automation responds to the need for greater data accuracy and a decreased manual workload – all while maintaining and improving underlying security. 

“Previously, we had a facility that allowed uploading a file into a system, which could be accessed by the Estonian Ministry of Interior,” Salovaara says about the process in place since 2005. “Our Estonian colleagues could log into the service, access the file prepared by us and then update their records in the population register based on that. While all of this was secure and audited, it was not as practical and required a lot of effort. 

The new automated solution secures the data exchange, ensuring improved maintenance of the entire system at the same time. 

“For example, we have a similar arrangement with the Nordic countries concerning population data exchange,” Salovaara brings forth. “But we are using legacy systems from the beginning of the century. When updating information security protocols, we need to wait until the last country is ready to make the updates before completing the process,” he continues. With a standardized interoperability solution, such as X-Road, the system updates are conducted faster and more securely. 

Besides the legal boundaries set by the original collaboration agreement from 2005, the technical implementation of the solution did not see any significant challenges. “We can say that technology is no longer the barrier, especially in this case where both parties already had experience with X-Road infrastructure,” Salovaara observes. “This means we can focus more on the substance and needs of the specific use case, as well as the legal details surrounding new types of data exchange,” he says. 

THE SOLUTION

X-Road has now automated the data transfer between the population registers of Estonia and Finland, improving information accuracy and timeliness as well as increasing the efficiency and security of the data exchange process.

The solution breathes new life into this long-standing collaboration. Population authorities can now easily access up-to-date information on their citizens whenever necessary; e.g. when preparing for national elections. While the legal framework established by the 2005 agreement currently limits the type of information that can be mutually accessed, the solution is a significant stepping stone to expanding the scope of data exchange in the future. 

Further negotiations are ongoing between Estonia and Finland, but a similar technical solution between population registers also has significant potential beyond the Baltic Sea region. With the free movement of people in Europe, there would, for example, be a need to standardize data exchange between EU member states. 

“Currently, if someone moves to Finland, we verify their identity by using their passport and verify their family relations with legalized paper certificates given by the authorities of their country of origin,” Salovaara explains, bringing up a typical case. “But requesting and providing these documents takes time – from both the public authorities and the citizens – and at least theoretically, the risk of forged paper documents remains. To have the most accurate data at all times, this information could be requested directly from other countries’ population registers. If these kinds of arrangements can be made, facilities like the X-Road would be very useful in the technical implementation of the data exchange!”

Automating data transfer between the population registers of Estonia and Finland serves as another example of how X-Road can simplify and enhance international collaboration, for both citizens and the state. 

First steps towards interoperability in the public sector of El Salvador

It is well known, by now, that two pillars of any digital transformation venture in the public sector are electronic identification and interoperability. These can be implemented regardless of the level of digital maturity of a country’s government. But in practice, they serve no less as the starting point and prerequisites for any further advancement in this field.

El Salvador, in Central America, is a perfect example of that. The public administration of the country faces numerous challenges, from data collection to data quality and exchange. But a small team led by Eric Ramírez within the Secretariat of Innovation at the government of El Salvador has identified in X-Road a suitable tool to pilot secure data exchange over the Internet

Speaking to him, we found out how their platform Tenoli can help the state provide services more efficiently – with two practical examples in population management and ease of doing business.

Background and institutional framework

El Salvador’s first steps towards a more digital public sector started in 2016 when the government formed a dedicated unit – the Dirección de Gobierno Electrónico. In 2019, then, the new administration created an Innovation Secretariat which kept the existing e-government unit, and created additional teams to support the modernization of government.

Naturally, such a move indicated a clear intention to look into best practices worldwide and options to trigger digitalization in the country’s administration. “The timing was right as, between 2015 and 2016, the source code of X-Road had been published under MIT free software license. That was the chance to customize the technology and start implementing it in El Salvador – although, with NIIS not existing yet, this proved more complicated than it currently is today”, Ramírez says.

In the meantime, the national legal framework was adapting to facilitate the take-up of the technology. The Law on Administrative Procedures (2018) set out principles for a once-only approach to data collection. Then, the Electronic Signature Act (2016) formalized the validity and usage of electronic signatures in the country. More recently, relevant official regulation (2019) established requisites, rules, and proceedings in the matters of data exchange between government agencies.

Needs and challenges

From an institutional perspective, El Salvador has been gearing up for a push towards increased digitalization in the public sector. But the challenges to tackle have been, and still are, many. It is one of those cases where it is hard to pinpoint specific needs to address, because targets pertain to the modernization of public administration practices as a whole, cross-agency.

“First of all, human resources to drive such transformation are quite limited at the moment. Government agencies need to allocate resources to support modernization efforts. At the same time, the necessary cultural change to shift from using paper, or to replace costly point-to-point leased lines, also has to be widespread,” Ramírez warns. Many data exchanges between government information systems are currently happening over private leased channels. “But indeed, there are already more cost-effective solutions available,” he highlights.

Consequently, it becomes more complicated to turn a high-level vision on digitalization into practice. Not because this hasn’t been set out – El Salvador has an ambitious Digital Agenda, in compliance with the Sustainable Development Goals of the United Nations. However, plans of digitalization also clash with other pressing needs such as building the necessary infrastructure to foster the general take-up of digital solutions.

The solution

To mark the first steps towards increased use of digital technologies in the public administration, El Salvador opted for putting in place a functioning data exchange layer. Using the free and open-source X-Road as a building block, the government of El Salvador has come to create Tenoli. Meaning ‘bridge’ in the local Nahuatl language, Tenoli is a platform – live since January 2017 – enabling public sector agencies to exchange information over the Internet.

Interest in the X-Road technology manifested basically as soon as the Dirección de Gobierno Electrónico was created. In 2017, one year later, data was already being exchanged through the layer between selected public agencies. “Beyond the possibility to adopt a more cost-effective solution, the business value we see lies in the way information exchange is standardized and secured. By now, we have managed to pilot and consistently run services in population management and business registration,” Ramírez explains.

So far, the most significant landmark has been indeed the birth registration service. This is particularly salient in a country where an average of 300 babies are born per day. Still, none of them institutionally exists until parents decide to carry out the paperwork for official registration at a municipal office. Or, much later in life, until a national ID card is given by the time these new-borns are old enough to vote.

“Connecting information systems between the Ministry of Health and the Population Registry was a no-brainer at that point. So, we searched for options that would allow us to do things as a private company would, while adopting a tech solution that would also be appropriately secured,” Ramírez says. Since 2017, when a baby is born, data from hospitals reaches the Population Registry digitally. Besides, the National Statistical Office makes use of this information too, for purposes of population census. In this way, such data gives public agencies the possibility to cross-check with municipalities information about newly recorded births.

Furthermore, data is also exchanged between the Ministry of Economics and a consortium of public partners to provide a tax ID to registered businesses-to-be. With that respect, the monthly average in the past year has been of 619 registrations. But at the moment, apart from the relevant portal MiEmpresa.gob.sv, no other services are being provided to citizens in the one-stop-shop fashion that the X-Road technology can favour. The room for improvement, though, with a widespread change of heart in institutional culture, can be massive.

“Some still use private leased lines to exchange data, but our work is also to make more and more public agencies understand that Tenoli is cheaper, secure, and most of all, scalable. However, to increase the outreach of the platform, a core value change is necessary. Because the solutions, tech-wise, are not complex or difficult to implement. What makes them work, also in our case, is cooperation, trust in institutions and the public administration. Where that fails, further advancements are just not possible,” Ramírez concludes.

Iceland joins the Nordic interoperability league with Straumurinn

On a quest to improve the availability and accessibility of public services, Iceland becomes the latest country to implement its own X-Road data exchange layer environment. Straumurinn, the Icelandic name given to the platform, is set to increase the ability of the government to deliver online services for both public and private actors.

Increasing security and safety of the data exchange established, and with the goal to make the once-only principle a reality, X-Road was presented as the ideal solution to tackle organizational and efficiency issues in the Icelandic public administration. Guðlaug Dröfn Þórhallsdóttir, Project Manager for interoperability at Digital Iceland (Stafrænt Ísland – Ministry of Finance and Economic Affairs), explains what’s the current status of the project and what are the main advantages that Straumurinn is set to bring.

Background and institutional framework

The cooperation between Iceland and the Nordic Institute for Interoperability Solutions (NIIS) officially started in September 2018. NIIS and Iceland went on to officially sign the partnership agreement, making Iceland the first partner of the international development organization of X-Road, and giving the kick-off towards the development and implementation of Straumurinn.

At the time, government authorities in Iceland were aiming to build an interoperability platform that would suit the needs of the public administration, in cooperation with the European Union with regard to the procurement process. During such stage, X-Road was identified as the way to go to provide Iceland with its own national data exchange layer. The project falls within the framework of the Digital Iceland initiative, under the supervision and jurisdiction of the Icelandic Ministry of Finance and Economic Affairs. 

The Minister of Finance and Economic Affairs of Iceland Bjarni Benediktsson met with NIIS in November 2018 – in presence of Siim Sikkut, Government CIO of Estonia, Anna-Maija Karjalainen, Director General of Public Sector ICT for the Finnish Ministry of Finance, and Ville Sirviö, CEO of NIIS. On February 27, 2019, a high-level meeting between the Prime Ministers of Iceland and Estonia, respectively Katrín Jakobsdóttir and Jüri Ratas, became the perfect occasion for ministers to announce that Iceland is adopting X-Road for secure data exchange and interoperability.

Needs and challenges

Iceland is currently undergoing an effort to update and improve its public sector systems, and enable authorities to deal more efficiently with the exchange of data and information. Among the needs laid out emerge the desire to deliver most public services in a digital ecosystem, to enforce the once-only principle when it comes to data provision and applications, to cut on the time and effort currently necessary to fill out forms and requests.

The country fares particularly well when it comes to telecommunication infrastructures, for example with regard to high speed network coverage and internet usage – but providing public services online is a different story. “Citizens demand more and better online services, but our distributed technical environment of databases and departments is characterized by poor interoperability,” Þórhallsdóttir explains. As the Head of Division at Digital Iceland, she’s aware that some structural work needs to be done, particularly so to avoid the risk of just replicating flawed practices and procedures in a digital environment.

Currently going through the set-up phase of Straumurinn, the Icelandic government is facing two types of challenges – organizational and technical. “Changes in laws and legislation are necessary, as well as a clear understanding of the distribution of roles and responsibilities in a changed ecosystem. We are now proceeding with setting-up the infrastructure, though we know that we need to create also a system of seamless services around the implementation of the platform,” Þórhallsdóttir says. Moving from such level of awareness, contacts with Estonian and Finnish partners stay strong, as mistakes and success points always prove to be good examples of the dos and don’ts in structural changes involving technology.

The solution

It did not take long to realize that X-Road is a viable option to solve some of the issues that Digital Iceland is aiming to tackle. The data exchange layer originally developed in Estonia, and then adopted by a series of other countries, has proved to be a fundamental support to the establishment of secure data exchange between the public and the private, and to be one of the key elements in the making of a truly digital society. We have witnessed it in Estonia, and then with the cross-border data exchange taking place between Estonia and Finland. Now, Iceland is implementing its X-Road environment, Straumurinn, to satisfy citizens’ expectations and make most public services available and accessible online.

Straumurinn is the Icelandic way to efficiency and security in information exchange. After the set-up phase, the first services will be available through the X-Road environment, enabling government agencies and ministries to exchange information through a standardized and secure solution. “We will be able to communicate with citizens using different information systems or online interfaces, and we will do so in a more flexible and functional way than today. X-Road will make the exchange of information between Icelandic agencies and business organizations easier to handle, especially with regard to queries and form submissions, and it will help us build our State portal,” Þórhallsdóttir highlights.

And though it is true that the data exchange layer was born in Estonia, the X-Road family includes today also Finland, Iceland, and the Faroe Islands. Could this be the prelude to a Nordic data exchange alliance? Cross-border cooperation reduces the workload of the public sector, and fosters international business activity through increased efficiency and reduced paperwork. Together, these countries are setting an example on how to build closer ties in a geo-economic area driven by digital governance and interoperability.

The business registers of Estonia and Finland start cross-border interoperability

The end of February 2019 brought great news for the enhancement of interoperability across borders. National business registers in Estonia and Finland are starting to exchange data between each other taking advantage of the opportunities given by X-Road, as the gateway to higher information accuracy and efficiency in handling queries.

Both parties involved have officially put their signatures on the agreement. Now, we take you through the main features of the cooperation on this project with Antti Riivari, Director General of the Finnish Patent and Registration Office (PRH), and Ingmar Vali, Head of Court Registration Department at the Estonian Ministry of Justice.

Background and institutional framework

The process that led to the signing of the agreement followed two parallel lines, not always moving towards the same goal at the same speed – there is a political side, and there is a technical side. Contrarily to what we could believe to be the issue in countries with a longer legacyon their shoulders, the technical aspects of the cooperation between the two business registers seemed to be cleared out by the end of 2017 already. However, in order to lay out and understand specifically what kind of data is going to be exchanged, and who has access to that information, there is the need for a specific agreement.

The final document with such information has been officially signed in February 2019, but it falls into place in the general institutional framework on digital cross-border cooperation between Estonia and Finland. Back in 2016, the Estonian and the Finnish Prime Ministers signed the joint declaration establishing the main lines of development to pursue for an international ecosystem in information exchange. Shortly afterwards, it became clear how the countries’ business registers could be among the first departments in the public sector to enjoy the advantages given by the implementation of X-Road.

Two things turned out to be necessary for this cooperation to come to life – refining the nation-wide implementation of X-Road in Finland and the compatibility with the Estonian system, as well as a specific definition of the people and the type of data that were to be involved in the information exchange. Though the cooperation on making the two systems match started right after the needs had been identified, it was only in 2018 that Estonia and Finland initially discussed the institutional draft agreement. Now in its official version, the document gives the green light to a few last operational tests and the practical beginning of the data exchange.

Needs and challenges

Antti Riivari (PRH) says it with a metaphor: “You need the road to drive on, and then you can have very different types of cars going to different places, but first you need the road.” X-Road in Finland was intended to provide a platform for all its departments and databases to communicate and cooperate. Then, after this initial phase, government agencies could actually proceed with more advanced practices of data exchange.

Despite not involving huge traffic of data and connections (for now), the Estonian and Finnish business registers identified a set of needs related to three main dimensions – quality of the data, efficiency, cost-effectiveness.

The topic of data accuracy is strictly connected to the long-lasting need for more security. “Let’s say that there is a company coming to Estonia to start a sub-unit or a branch here. If the mother company has some problems related to bankruptcy, or court cases, or annual reports, the business register in Estonia needs to know what is going on”, is the fitting example presented by Ingmar Vali (Ministry of Justice). Thus, enhancing the registers’ capability to gather the information they need results in a higher confidence in the data itself and less bureaucracy for both public and private actors, making checks and approvals more precise and quicker.

“But despite the general absence of problematic issues, an obstacle has been represented by fees”, Vali explains. While information can be accessed free of chargein the Estonian case, most business registers from other European countries require payments to access specific data. With the Finnish business register making no exception in this sense, this element accounted for the main talking point in the definition of the cooperation.

The solution

X-Road is now allowing the business register of Estonia and Finland to exchange queries directly, increasing the efficiency of the communications and improving the accuracy of the data. 

The recently signed agreement also generates more advantages for both the agencies and entrepreneurs – in the first place by cutting the costs of submitting requests, and in the second by eliminating the unnecessary paperwork that would have been required in country-to-country transactions. “It’s a need-driven process, we’re making sure that everything works as it should, and then we’ll explore future possibilities step by step. We now want to define and connect the authorities that would be most keen on accessing information on Estonian companies”, Riivari says.

Basic company details aside, the improved quality of the data and information security brings data exchange to the next level. “After reaching the full-scale implementation phase, borders and paper movement will basically stop, which is our goal because it makes everything more efficient and less costly. Imagine if these principles would take over across Europe! Estonia and Finland, in this sense, are doing well in setting an example for this idea”, Vali states.

By having X-Road as a national data exchange layer solution in Finland and Estonia, plugging in units and departments of the public administration to an X-Road trust federation between two countries comes easier. The case of the two business registers is another sign of how technology can favour international cooperation, and make routine work smoother and more efficient for both users and service providers.

Estonia and Finland heading towards real-time data exchange on taxation

The Estonian Tax and Customs Board (EMTA) and the Finnish Tax Administration (VERO) are moving towards a cooperation that would allow the agencies to exchange data in a more accurate and efficient way. And speaking of ways, what could serve the purpose better than the reliable and well-tested infrastructure of X-Road?

With the project currently on hold, but at a stage where preliminary talks and declarations of intention have already been explored, Anna Aleksejeva (EMTA) and Ann-Sofi Johansson (VERO) tell us about needs and benefits that this project will be dealing with.

Background and institutional framework

The northern and the southern shores of the Gulf of Finland celebrated the 100thanniversary of their independence respectively in 2017 and 2018. However, by that time, Estonia and Finland had already reached a crucial agreement enhancing the long-standing cooperation between the two countries: at the coming of age of the two Republics, Prime Ministers of both sides had signed a joint declaration in 2016 enhancing cross-border data exchange and the development of digital services in different fields. Tax records and fiscal matters, naturally, were included in the declaration as well.

The tax boards of Estonia and Finland have started a project aimed at fostering the exchange of information via X-Road, as the platform provides the best solution for the countries to share data in a secured, stable, and efficient digital environment. Legal obstacles have not presented concerns, and a draft agreement awaits to receive the final signatures; however, the current project, started in December 2016 and temporarily put aside exactly one year later, encountered a few bumps on technicalities regarding the databases that were to be connected. Currently on hold, both parties remain strongly interested in the project and work towards solving the last issues that can make this cooperation start in practice as well. 

The interest manifested by Estonia and Finland does not represent a novelty in this sense, not even for what concerns tax-related data exchange. The forefather of the current project could be identified in the BSR TaxI plan from 2014 and 2015, aimed at gathering tax authorities and state information agencies from Estonia, Sweden, and Latvia, and explore the possibilities for cross-border cooperation “on the electronic exchange of tax information in the Baltic Sea Region”. Though Finnish tax authorities did not take part to that project, both Estonia and Finland took the chance to openly express interest in starting bilateral agreements that would make such kind of cooperation come to life. As it then turned out, tax-related topics became part of the broader, more comprehensive agreement that the two countries reached in order to establish a smart process of information exchange.

Needs and challenges

Due to the current status of the project, it’s not easy to provide numbers on how many people and companies would be positively affected by this project. The needs to be tackled, instead, are clear and shared between the tax authorities of the two countries. “It is difficult to summarise and process the number of requests we receive”, explains Aleksejeva, Chief Expert at the International Information Exchange unit of EMTA, “as these often include information from foreign databases and additional documents that need to be analysed by an employee”. It is primarily a matter of human resources, since “human labour is frequently involved and now it can take from 1 up to 20 months to get the information we need”, Aleksejeva explains.

Ann-Sofi Johansson, Manager at the International Information Exchange department of VERO, gives us an idea of the pipeline involved in the process of requesting information. We are currently presented with a situation where employees need to overlook the process of auditing and requesting information from foreign authorities from the beginning to the end. “Saving resources is important, for example in the case of an audit: right now, if we need information from Estonia, first we have someone defining what kind of information is needed; then someone sends the request; then there’s another person on the other side receiving and processing the request, and so on and so on”, Johansson says.

Connecting agencies and databases, once that issues of compatibility and readability of the data are overcome, will allow the two Tax Boards to save human and economic resources, and to increase the accuracy of the data exchanged.

The solution

The reliability and scalability of X-Road has been put to test in different contexts and situations already. The reasons that make its implementation so appealing in this case are connected to what made it the backbone of e-Estonia, serving the needs of a whole country since 2001: efficiency, accuracy, security.

The path Estonia and Finland already decided to take, first with the Prime Ministers’ declaration, and then with the start of different projects aimed at enforcing such cooperation, implies the use of X-Road in its adaptability to diverse situations. As both the Estonian and the Finnish Tax Boards have recognized, the current project will bring significant advantages to the two agencies in dealing with income declarations, VAT information, and international audits.

“What we need to have is real-time information right from the start,” Johansson states, “as the world keeps moving faster, and it is important for us to dispose of correct information, at the right time, to formulate correct data on taxation”. The benefits do not affect only the quality of the information exchanged, but also the general workflow managed by the two agencies. “X-Road would be the perfect solution to avoid unnecessary manual analysis of data and to automate the information exchange between databases for simple requests,” Aleksejeva highlights.

The Estonian Tax and Customs Board and the Finnish Tax Administration remain interested in the project, and are currently working on the issues of compatibility and readiness to make the cooperation effectively see the light.