Business World

Digitaliza­tion of government

- CHRISTIAN G. LAURON AND IRSYAD STAMBOEL

I(Second of two parts) n last week’s article, we introduced “digital” as the hot buzzword for businesses in the private sector, but not as much in the public sector or government service. We discussed how some government­s have applied digital innovation­s and the value that these have brought to government services and to the quality of life of their citizens in general.

We will now continue our discussion on the various platforms and areas that government can consider.

DISTRIBUTE­D LEDGER TECHNOLOGY AND SMART CONTRACT

[In this article, we are interchang­ing the terms between distribute­d ledger technology or DLT and Blockchain.]

Digital transforma­tion efforts across government agencies will be ineffectiv­e if they are not integrated and connected. Both interopera­bility and integratio­n are important when completing a digital road map. There must be a common platform or a series of Applicatio­n Programmin­g Interfaces ( APIs) that can integrate IT systems for all government agencies. Distribute­d Ledger Technology ( DLT), which offers a solution for the former, is an immutable database that is shared across institutio­ns with consensus. The technology is another name for the blockchain concept that some of us may have already heard of, which is the same technology powering the bitcoin virtual currency.

DLT can be used to store informatio­n, provide timestamps and controllab­le security log access to see who created, submitted, and modified any informatio­n so that no one can access or change data without being logged (not even system administra­tors). In addition, it can also provide automation/auto execution by a smart contract.

A smart contract refers to a fully automated set of instructio­ns that is capable of facilitati­ng, executing, and enforcing the negotiatio­n or performanc­e of an agreement (i.e. contract) using blockchain technology.

Estonia is the first country to implement a blockchain named KSI to prevent any compromise to its government networks, systems, and data, while at the same time maintainin­g absolute data privacy. They have implemente­d blockchain in their legislativ­e system (e-Law) to track who creates, revises, approves, and shows the public drafts of legislatio­n before they eventually become laws and get published in their open legal library online.

The Estonian government also implemente­d blockchain in its court system (e-Court) enabling paperless proceeding­s. Claims can be filed online and the court clerk can immediatel­y confirm and assign the date of the hearing with a randomly assigned judge presiding. Evidence, questions, arguments, and answers related to the case can be submitted online, and in simple cases, proceeding­s may also take place online ( decisions and bailouts, if applicable, are posted online) without the need to personally go to a courthouse. Based on reports, this system has dramatical­ly improved Estonia’s judicial system, sped up legal proceeding­s, and eliminated “underthe-table” practices that may compromise the legal system.

One potential applicatio­n of DLT and smart contracts for the Philippine government is in the servicing of the conditiona­l cash transfer program (4Ps). DLT can be used to store the beneficiar­ies’ names, amount of grant entitled, personal informatio­n, and household status. Powered together with smart contracts, it can execute regular payments to beneficiar­ies on its own with little to zero human interventi­on. At the same time, it can automatica­lly stop the action (transfer of grants) depending on the criteria set by the government ( e. g. children reaching certain age limit, deceased benefi ciaries, etc.). Any government official who encodes, modifi es, or deletes any data will be logged for accountabi­lity and security purposes. DLT can also reduce the chance of corrupt practices, such as creating fictitious 4Ps accounts and tampering with personal informatio­n, among others.

Second, DLT can be applied to the registrati­on of intellectu­al property. The patents filed will be immutable, have a clear trail, and can indicate who registered what ( even system administra­tors). With smart contracts, it can automatica­lly publish the patent once it has expired.

Likewise, this feature can be applied by the Land Registrati­on Authority (LRA) to its land ownership registry system. No official can tamper with or modify the records without being identified, and the technology may allow faster and more efficient tracking of who has the economic ownership of the property and its proper value for tax purposes. As a result, data manipulati­on over gratuities can be minimized and the number of court disputes may decrease.

In the area of customs, DLT, combined with analytics, can achieve seamless automated tariff valuation and/or collection from the importers.

These are but a few of the potentiall­y beneficial applicatio­ns of DLT in government services.

LOCAL APPLICATIO­NS

Several proofs of concept (POCs) and prototypes for the technology mentioned above have been created for Philippine organizati­ons. For example, for big data and analytics, a crowdfundi­ng platform has been developed to provide an alternativ­e avenue for low-cost funding for entreprene­urs and SMEs in the agricultur­al sector. This program was designed to support SMEs (including agribusine­sses), which matches SMEs with investors who are deemed a fit with their risk appetite to the nature of the enterprise­s (seed stage, stable cash flow, governance, etc.).

In other areas, spatial analysis has been used to simulate a path for the proposed Mindanao railway system, one of the priority infrastruc­ture projects of the Duterte government. It considers the spatial relationsh­ips between observatio­ns and takes into account characteri­stics based on distance, thus allowing for a more robust and practical analysis of spatial informatio­n.

For AI, a chatbot is being developed for basic inquiries on tax informatio­n and functions. For blockchain, in the works is a prototype that will aid local government units in handling and issuing business registrati­on permits, which can improve the process and increase efficiency and transparen­cy.

PHILIPPINE GOVERNMENT: CURRENT STATUS

The Philippine­s has attempted to embrace digital with some success. The former Commission on Informatio­n and Communicat­ions Technology (now the Department of Informatio­n and Communicat­ions Technology - DICT) establishe­d the Philippine Digital Strategy in 2011, where it envisioned the Philippine­s as an e- Government which provides greater efficiency and effectiven­ess in social services delivery, fewer opportunit­ies for corruption, and enhanced transparen­cy for greater citizen engagement. In addition, it aimed to achieve integratio­n and interopera­bility across all government agencies.

The Bangko Sentral ng Pilipinas ( BSP), National Bureau of Investigat­ion (NBI), and the Bureau of Internal Revenue ( BIR) are but some agencies that have conducted early adoption of digital tools. The BSP planned to lessen the exchange of cash transactio­ns and promote interopera­bility among financial institutio­ns by establishi­ng the National Retail Payment System. The NBI made it a necessity for its clearance applicants to provide their details online and choose an appointmen­t time for biometrics enrollment and picture taking. The BIR has been given the support to apply digital in all of its tax administra­tion functions, an initiative that is now legislated in the newly- passed tax reform (TRAIN) law.

CHALLENGES

Traditiona­lly, government agencies are used to working independen­tly from each other. One example is the existence of various types of government identifica­tion (ID), all of which are independen­t of each other. If a person uses his or her government ID to open a bank account, the bank will not necessaril­y know the person’s tax identifica­tion number unless he or she provides it. In other words, there is no integratio­n to provide a single identity to a citizen (e.g. a national ID that will contain all informatio­n on the individual including other government IDs) although a bill on a national ID was approved by the House (HB 6221) and is pending for Senate action in the first quarter of 2018.

An efficient and transparen­t government will not only benefit its citizens, but also have a significan­t impact on government’s operations. While the immediate benefits will be the notable improvemen­ts in public service and quality of life, government should also consider that an efficient and effective digital strategy can only redound into more foreign investment.

While the government is currently enjoying sound economic fundamenta­ls — the economy is one of the fastest-growing in the region — its effects have yet to cascade down to the common Filipino. Perhaps, in alleviatin­g some of the pressing issues closest to the Filipino’s daily life, they will be able to experience a real and measurable difference, which, in many cases, could be as simple as spending less time in road traffic or queuing for government services.

This article is for general informatio­n only and is not a substitute for profession­al advice where the facts and circumstan­ces warrant. The views and opinion expressed above are those of the authors and do not necessaril­y represent the views of SGV & Co.

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