The founder and chairman of Daewoo Group, Kim Woo-choong, yesterday warned of an economic and social collapse in South Korea unless urgent action is taken to deal with the country's crisis. In the most outspoken comments by a leader of one of the country's powerful industrial conglomerates, or chaebolFinancial Times that the possibility of another financial crisis would remain in South Korea until there was wide-ranging reform of the financial system to allow companies a chance to return to profitability. 'Moreover, the current situation could be worsened in the wake of the consecutive collapse of insolvent businesses and mass unemployment creating social unrest,' he said. 'The international financial market still seems unstable and foreign investors are dubious about the soundness of our economy.' Mr Kim, whose company has 320,000 employees worldwide and annual sales of US$65 billion, delivered a highly qualified endorsement of President Kim's reform programme, describing it as 'positive'. 'Although the current situation is complex in nature, the government took the right step by giving priority to the resolution of the currency crisis as part of curing the ailing economy,' he said. However, this recognises only a minor element of the government's programme which calls for wholesale reform of the country's labour laws and the private and public sectors. President Kim has been highly critical of the role played by the chaebol in the country's recent financial development and has laid much of the blame for the present crisis at their door. The president is calling for the implementation of measures to ease the grip which the conglomerates have over the economy through their vast diversified interests including heavy industry, car making and electronics. Measures include the encouragement of greater direct foreign investment and efforts to cut massive debt to equity ratios. However, Kim Woo-choong remains committed to building one of the world's leading forces in its core businesses, cars and electronics, at a time when other chaebol have cut back to weather the storm. 'Recognising the seriousness of the present condition, the business community, especially the big corporations, is exercising active leadership in the financial turmoil,' he said. 'In this regard our objective is to build a large current account surplus through aggressive export-intensive management in the shortest period of time.' As the result of South Korea's dependence on exports the failure to deal rapidly with the crisis would lead to an 'irrevocable' economic failure, he said. Mr Kim said: 'In this regard, the government needs to lead the private sector by presenting a management model in the public sector and pragmatic reform programmes based on a realistic approach, rather than just offering textbook statements.'