U.S. President Donald Trump speaks alongside Howard Lutnick in the Oval Office of the White House in Washington, Friday (local time). Lutnick reportedly told a Korean business delegation in Washington that day that each of them should invest at least $1 billion in the U.S. for expedited permits to their investments. Reuters-Yonhap

Calls are growing for the government to provide much stronger incentives for domestic investments in strategically important sectors, in order to prevent U.S. President Donald Trump's protectionist policies from causing an exodus of high-paying manufacturing jobs to his country.

In particular, Korean battery firms have asked for the introduction of measures similar to the previous U.S. administration's Inflation Reduction Act (IRA), which extended to them cash payouts and sell their tax credit rights to third parties.

The request came as the battery industry's deteriorating profitability makes it difficult for them to enjoy the corporate income tax reduction in Korea.

Under the current Korean law, the corporate income tax reduction is the only incentive offered to investors of strategic technologies, such as battery manufacturing.

"Considering that most battery firms are still facing difficulties generating enough cash flow and profits, the current tax credit system does not seem effective," Kim Seung-tae, director of the Korea Battery Industry Association's (KBIA) policy support office, said during a National Assembly forum earlier this month.

Lee Sang-soo, who is in charge of tax affairs at LG Energy Solution (LGES), emphasized at the forum that cash payouts will lead battery firms to reinvest in the Korean market.

"The battery industry can become a goose that lays golden eggs," he said.

Korean battery firms have recently faced growing pressure to relocate their manufacturing facilities to the United States, as Trump plans to impose heavy tariffs on imports of all kinds of goods, including batteries, and offer expedited permits to companies investing over $1 billion in his country.

Regarding the IRA, the U.S. president has repeatedly indicated his intention to abolish the law, which came into effect under the presidency of his predecessor, Joe Biden.

U.S. Commerce Secretary Howard Lutnick also reportedly told a Korean business delegation in Washington last Friday (local time) that each of them should invest at least $1 billion in the U.S., if they want to enjoy incentives for their investments.

His remarks came as Trump signed a memorandum titled the "America First Investment Policy" to fulfill his election pledge.

"The United States will create an expedited fast-track process, based on objective standards, to facilitate greater investment from specified allied and partner sources in U.S. businesses involved with U.S. advanced technology and other important areas," the memo read.

Amid the fears of losing more domestic jobs to the U.S., Rep. Lee Yeon-hee of the main opposition Democratic Party of Korea (DPK) proposed a revision to the Act on Restriction on Special Cases Concerning Taxation last month to introduce a Korean version of the IRA.

"It is necessary to introduce a new tax system to promote domestic production and employment in strategically important industries," Rep. Lee Jae-myung, leader of the DPK, said during his visit to Hyundai Motor's factory in Asan, South Chungcheong Province, Thursday.

Late last year, the Ministry of Trade, Industry and Energy also asked a law firm to review the feasibility of cash payouts to companies investing in strategically important sectors.

"If the government allows us to receive cash payouts or sell our tax credits to a third party, it will be more helpful to us," LGES CEO Kim Dong-myung, chairman of the KBIA, told reporters on Wednesday.

However, it remains uncertain whether the finance ministry will accept the proposal, in light of the sharp decline in tax revenue. A Korean version of the IRA can also be seen as a protectionist measure that could provoke the U.S. to justify its retaliatory tariffs on Korean products.

During the previous 21st National Assembly, lawmakers did not pass the proposals for the Korean version of the IRA, and they automatically expired with the conclusion of the Assembly's term. The main focus of those proposals, however, was to promote eco-friendly industries, rather than offering stronger incentives such as cash payouts.