ISAS Briefs

Summary

A memorandum of understanding was signed between Sri Lanka and AI Singapore in July 2025, marking a pivotal step toward advancing artificial intelligence adoption and capacity building in Sri Lanka. To build on this momentum, the Sri Lankan government must focus on strengthening human capital, infrastructure, policy continuity and governance frameworks, while also expanding partnerships with international actors, state governments and global platforms.

On 28 July 2025, Sri Lanka formalised a strategic partnership with AI Singapore through the signing of a memorandum of understanding (MoU) at the National University of Singapore. The MoU focuses on three main pillars: capacity building through training and upskilling for local professionals; advisory support, leveraging Singapore’s experience in AI governance; and knowledge sharing via joint research and development projects aimed at addressing national challenges in sectors such as healthcare, agriculture, transportation, education and the public sector.

Building AI Capacity in the Global South

Sri Lanka’s National Digital Economy Strategy aims to establish the country as a leading digital innovation and entrepreneurship hub in the Asia-Pacific. Central to this vision is an “AI-first” approach, outlined by the President’s Chief Advisor on Digital Economy, Dr Hans Wijayasuriya. In 2025, the government announced a national artificial intelligence (AI) strategy aimed at increasing the digital economy’s contribution to gross domestic product from between three and five per cent to 15 per cent within five years. This builds on the groundwork laid in 2023 to initiate the development of an AI strategy through a multi-stakeholder committee, with Singapore and India recognised as important sources of guidance and best practices.

International collaboration is critical for Global South countries such as Sri Lanka to address the challenges in adopting AI effectively. In May 2025, a partnership between AI Singapore and the United Nations Development Programme underscored Singapore’s pivotal role in advancing AI literacy in developing countries. By extending its ‘AI4Good’ initiative beyond national borders to regions such as Southeast Asia, the Pacific Islands and the Caribbean, Singapore is effectively positioning itself as a regional and global leader in AI education and capacity-building. This effort aligns with a broader consensus across the Global South on developing indigenous AI capabilities, including China’s Global AI Governance Initiative in 2023, which advocates for equitable and inclusive AI benefits worldwide.

Challenges to AI Adoption in Sri Lanka

Sri Lanka faces several structural challenges in harnessing the potential of AI to transform various sectors. Key among these are the skills and resources needed to build and maintain foundational digital infrastructure, and the effective integration of AI into critical sectors, such as curriculum development in education and modernising public systems, to ensure the workforce is equipped to meet the demands of ongoing expansion. Human capital remains a critical bottleneck and Sri Lanka ranks 85th out of 193 countries in the Oxford Insights Government AI Readiness Index 2024. These issues are compounded by a persistent brain drain, as skilled professionals seek better opportunities abroad, most recently, following a national debt crisis in 2022. Nevertheless, despite a slight decline in computer literacy in 2024 and an ongoing urban-rural digital divide in Sri Lanka, 70.6 per cent of the employed population is reported to be computer literate.

The other main challenges to AI development in Sri Lanka stem from foundational infrastructure gaps and a lack of strategic planning and policy continuity. The digital infrastructure and energy supply for advanced AI applications, requiring high-performance cloud computing and storage, as well as reliable high-speed internet connectivity, are reportedly lagging. High energy costs and limited power generation capacity further make it difficult to sustain digital industries that rely heavily on stable and affordable electricity.

AI is also often viewed as a ‘one-tech stop’ solution, a transformative tool capable of addressing systemic challenges across sectors such as agriculture, healthcare, education and public services. However, without addressing deeper structural shortcomings, that would involve aligning AI policies with national industrial priorities, the creation of a policy environment that encourages innovation and the reduction of socioeconomic inequalities that hinder human development, Sri Lanka risks delaying its ability to fully harness the transformative potential of AI.

Balancing AI Innovation with Democratic Accountability

Sri Lanka has sought to demonstrate its commitment to advancing AI and digital innovation by proposing and enacting legal and regulatory frameworks intended to support this goal. In 2022, it became the first South Asian country to introduce data protection legislation through the Personal Data Protection Act (PDPA), No. 9 of 2022, which aims to regulate the processing of personal data and safeguard individual privacy. Additionally, a Cyber Security Bill seeks to establish a dedicated cybersecurity agency to ensure a secure and resilient digital environment, and is under review. The Online Safety Act, No. 9 of 2024, similarly intends to address emerging online harms and foster a safer digital environment.

The PDPA, though progressive in intent, has been criticised for granting broad powers to the Data Protection Authority (DPA) to be established under the Act, as key terms like ‘harm’ and ‘safeguards’ are vaguely defined, leaving broad discretion to the DPA. The Act is reported to favour data controllers, allowing wide exemptions for public institutions without adequate oversight. These gaps undermine accountability and fail to ensure meaningful protection of individual privacy rights. Similarly, the Online Safety Act and draft Cybersecurity Bill have sparked debates over centralised authority and limited public accountability, with concerns that it may prioritise state security over individual digital rights. Moreover, the PDPA and Cybersecurity Bill are delayed in terms of being operationalised and in the passage of legislation respectively. Together, these frameworks require stronger safeguards, effective operation and public engagement to ensure they protect citizens’ rights, while enabling accountability of big tech platforms and public safety.

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Dr Rajni Gamage is a Research Fellow at the Institute of South Asian Studies (ISAS), an autonomous research institute at the National University of Singapore (NUS). She can be contacted at r.gamage@nus.edu.sg. Ms Preeti Chandrakumar Patil is a Research Intern at the same institute. She can be contacted at preetipatil@u.nus.edu. The authors bear full responsibility for the facts cited and opinions expressed in this paper.

Pic Credit: Sri Lanka and Singapore Sign MoU on Artificial Intelligence Collaboration – Ministry of Foreign Affairs, Foreign Employment & Tourism