Sri Lanka is seeking Chinese support to establish a National Sovereign AI Computing Centre as the country faces a shortage of data center and cloud capacity needed to support its growing digital economy, including digital identity and government services.
The country currently has around 5 megawatts (MW) of data center capacity, while demand from banks and other organizations is growing. Government officials estimate that Sri Lanka needs between 25 and 50 MW of cloud and AI computing capacity in the short term.
The infrastructure shortage comes as Sri Lanka moves ahead with its Unique Digital Identity (SL-UDI) project , alongside plans to connect digital identity, data exchange and payments infrastructure to public and private-sector services.
A meeting at the Ministry of Digital Economy in Colombo brought together Deputy Minister of Digital Economy Eranga Weeraratne and Chinese Ambassador Wei Huaxiang to discuss closer cooperation on AI and the digital economy.
The discussions focused on Sri Lanka’s digital transformation priorities, strengthening bilateral cooperation in AI and seeking support from the Chinese government to establish a National Sovereign AI Computing Centre.
The two countries are also working toward a memorandum of understanding (MoU) on AI cooperation.
Weeraratne shared updates on the use of AI in government institutions, including the Department of Government Draftsman and Parliament, and outlined the country’s need for more physical infrastructure to support sovereign AI capabilities.
Chief Presidential Adviser on the Digital Economy Dr. Hans Wijayasuriya highlighted the technological benefits Sri Lanka has received through its longstanding diplomatic relationship with China.
Waruna Sri Dhanapala, Secretary to the Ministry of Digital Economy, said a draft agreement on digital cooperation is being developed following visits to China by Sri Lanka’s president and prime minister over the past two years.
Consultations are underway with the Ministry of Finance, the Attorney General’s Department and GovTech leadership.
The Chinese ambassador expressed interest in research and development initiatives and skills training proposed by Weeraratne, indicating a willingness to share technical knowledge and expertise for the proposed AI computing center.
Weeraratne, who attended the World AI Conference 2026, acknowledged that Sri Lanka still needs to develop the physical infrastructure for sovereign AI, although smaller AI data centers have already been established with an emphasis on protecting citizens’ data.
Sri Lanka’s government is also preparing to step up investment in data center and cloud infrastructure as private suppliers have yet to respond adequately to growing demand.
“The Government really doesn’t need to take this on, but it will,” Wijayasuriya said during a discussion on digital transformation at the Sri Lanka Economic and Investment Summit 2026.
The session was moderated by Shiran Fernando , Secretary General and CEO of the Ceylon Chamber of Commerce.
Wijayasuriya said the demand for locally hosted cloud infrastructure is already clear, particularly among financial institutions.
“I think it is very clear that there is demand now. The banks are crying out for sovereign, resident cloud infrastructure.”
The demand also comes as Sri Lanka develops the digital infrastructure needed to support identity verification, financial services and government transactions.
As Biometric Update reported earlier this month, Sri Lanka’s emerging digital public infrastructure includes SL-UDI, the National Data Exchange and the National Payment Platform. The integration of biometric-enabled digital ID authentication and secure data exchange could support financial services, including digital onboarding, lending and fraud prevention.
The government is also working to expand digital public services, with a target of digitizing government transactions by 2030 .
Wijayasuriya believes private-sector suppliers should be meeting the growing demand for cloud capacity.
“There are sufficient demand signals out there for supply to be created. I sincerely believe that,” he said. “The private sector can take this ball and run.”
The Ministry of Digital Economy is collaborating with the Board of Investment to develop an investment and incentive framework for the data center, AI and cloud sectors.
While the government is expected to provide some funding, its primary role will be to encourage domestic and foreign direct investment in infrastructure.
Wijayasuriya identified the cost of energy as one of the major challenges facing data center development.
He compared Sri Lanka’s limited capacity with approximately 1.5 gigawatts in Malaysia, highlighting the scale of investment needed. The government is considering an initial expansion target of around 25 MW, taking a measured approach because of the environmental and energy implications.
Wijayasuriya cautioned against developing data center capacity primarily to serve foreign markets without considering the economic value of the energy consumed.
“Essentially, it’s an energy export. We need to be very clear about the economics behind that energy export and what the next best use of each megawatt generated in our country is,” he explained.
“We’re adopting a careful strategy to ensure our industries remain genuinely competitive while also generating enough export revenue from our data infrastructure, all while being mindful of energy and environmental impacts,” he added.
The push for domestic cloud and computing capacity comes as Sri Lanka seeks greater control over the infrastructure supporting its digital transformation.
The government has already outlined a hybrid sovereign cloud strategy , while its India-backed SL-UDI project is being developed using the Modular Open Source Identity Platform (MOSIP).
The national digital ID project is expected to begin with a phased rollout, although procurement and funding challenges have affected implementation.
Questions about data sovereignty have also featured in the national ID project. As Biometric Update previously reported, officials raised concerns about the role of a foreign systems integrator, data migration, security controls and the management of sensitive identity information.
The government has emphasized the importance of domestic oversight of identity data and system operations, even as it relies on international funding and technical expertise.
The proposed Chinese AI computing center is separate from the India-backed digital identity project, and no direct connection between the two has been announced.
Both initiatives, however, highlight the importance of reliable computing infrastructure, technical expertise and data governance as Sri Lanka expands digital government services.
For Sri Lanka, the immediate challenge is to attract sufficient investment in data centers, cloud infrastructure and AI computing while managing energy costs and ensuring that new capacity meets the needs of local businesses, government institutions and citizens.
China | cloud computing | data center | digital public infrastructure | digital sovereignty | identity infrastructure | SL-UDI (Sri Lanka Unique Digital Identity) | Sri Lanka
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