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There has been some unhappiness among local contractors at projects funded by China which are built by Chinese contractors and where even part most of the labour is imported.
"Priority preference for local bidders for projects with local funding has been increased to 15 percent," minister Gamini Lakshman Pieris told reporters.
"Already a 10 percent preference is given."
Pieris said the cabinet of ministers had decided to increase the price advantage given to local contractors on a proposal by President Mahinda Mahinda Rajapaksa, who is also the finance minister.
The extra payment would be made only for projects financed with money raised domestically.
A government raises money from the people through taxes, borrowings locally, printing (central bank credit) or from abroad.
Many projects financed by multilateral agencies require international competitive bidding to get the lowest price.
But bi-lateral loans from foreign governments sometimes limit them to bidders from