Sri Lanka is stepping up efforts to position itself as South Asia’s digital gateway, courting Japanese investors to join a landmark initiative a proposed neutral AI Data Centre designed to serve the region.
The announcement came this week in Tokyo, where Chief Presidential Adviser on Digital Economy Dr. Hans Wijayasuriya, addressing a business and investment forum chaired by President Anura Kumara Dissanayake, extended an open invitation for Japanese participation in the project.
Dr. Wijayasuriya described the data centre as a virtual Special Economic Zone (SEZ) that would grant data sovereignty to all participating nations while offering attractive concessions for investors, including energy usage incentives.
He emphasized that the centre forms part of the Government’s broader plan to expand the digital economy fivefold to US$15 billion by 2030, with a goal of tripling digital exports to US$5 billion and growing the digital workforce to 200,000 over the next five years.
According to the proposal, the facility will ensure that countries using the platform retain ownership and control of their data a critical factor in the emerging digital era where information is both an asset and a vulnerability.
For investors, Sri Lanka promises not just favorable conditions but also a strategic location and policy environment aimed at building a competitive hub for digital services in South Asia.
Analysts note that the initiative could deliver several long-term benefits if executed effectively. A regional centre that guarantees data sovereignty would enhance trust among partner nations and encourage greater cross-border collaboration.
With Japan’s technological expertise and capital, Sri Lanka could attract significant foreign direct investment (FDI), modernize its infrastructure, and create new high-skilled employment opportunities in cloud computing, cybersecurity, and AI-driven services. The project could also strengthen the country’s export profile by enabling local firms to develop digital products and services for international markets.
However, the plan comes with substantial challenges. Data centres are notoriously energy-intensive, and ensuring uninterrupted, low-cost, and sustainable electricity will be essential. Despite government assurances of concessions, energy infrastructure upgrades and reliable power generation remain prerequisites for investor confidence.
In addition, Sri Lanka must deliver world-class digital infrastructure, including ultra-fast connectivity, resilient cooling systems, and secure data handling practices that meet global compliance standards.
Another concern is the skills gap. While Sri Lanka has made strides in ICT education, it still faces shortages in advanced AI engineering, data science, and digital governance expertise. Closing this gap will require significant investment in education and workforce training to support operations and attract high-value tenants.
The project’s return on investment (ROI) is also uncertain in the short term. Building such a facility demands heavy capital expenditure on land, construction, and energy systems, while revenues depend on strong regional demand and sustained policy stability.
If successfully implemented, the centre could generate FDI inflows, high-skilled jobs, tax revenue, and technological spillovers across multiple sectors. Yet, delays in execution or policy inconsistency could erode investor trust and limit returns.
From a strategic perspective, the proposal is timely. Global tech firms and governments are increasingly seeking neutral, trusted locations for data hosting amid rising concerns over privacy and geopolitical rivalries. Sri Lanka’s vision aligns well with this trend and could strengthen its position as a regional digital hub. But success will depend on careful planning, transparent governance, and strong partnerships with technologically advanced nations like Japan.If managed effectively, the neutral AI Data Centre could become a cornerstone of Sri Lanka’s digital transformation fostering innovation, enhancing regional cooperation, and cementing the country’s role in the global AI economy. But the true measure of its success will lie not in the ambition of its design, but in the precision and consistency of its execution
