The heads of South Korea’s major business groups called upon the government and businesses to undertake bold structural reforms and continued innovation to remain globally competitive in 2016, while projecting a prolonged economic downturn in the new year.

“The Korean economy is at a crucial crossroads. Once we fall behind in the global competition, it (would be) difficult to regain our position,” said Huh Chang-soo, chairman of the Federation of Korean Industries, Korea’s big business lobbying group.

Noting Korea’s major manufacturing industries face heightened competition from China and Japan, the FKI chairman said businesses must strengthen their global competitiveness and productivity through “bold innovation” and “early investment into finding future growth engines.”

“More than anything, structural reforms must be carried out without trouble. In particular, labor and policy reforms must be immediately implemented for the Korean economy to remain competitive,” said Huh, also the chairman of GS Group.

The chief of the Korea Chamber of Commerce Industry, the country’s largest business association, also emphasized the importance of reform, calling for “structural changes” for survival.

“We must make full use of this last opportunity for economic reform,” said KCCI chairman Park Yong-maan. “Only those who escape the familiar practices and actively prepare for change and reform can survive in the competition.”

“At the current state of economic advancement, Korea needs not only capital, personnel and technology, but also corresponding policies and regulations to leap forward,” said Park, who also leads Doosan Group.

“(The government) must reshape its regulations and establish policies that enable companies to freely compete over market incentives, driving up the country’s productivity,” he said.

Businesses will take the lead in bring forth an “era of creativity” through cooperation and the fusion of ideas and technologies, the KCCI chairman said, eyeing the emergence of new industries led by the Internet of Things platform of Internet-connected products, big data, new materials and renewable energy, among others.

The chairman of the Korea International Trade Association stressed the importance of increasing the productivity and global competitiveness of Korean companies through innovation in an era of global uncertainties and fast changes.

“We will do our best to support Korea’s exports, with aims to recover the country’s trade back to the $1 trillion level and boost the local economy,” said KITA chairman Kim In-ho.

Korea’s small and middle-sized enterprises also vowed to step up their role in sustaining Korea’s economic growth by taking on a bigger and more balanced presence in the local economy.

“It is time to move away from times of economic growth led by a small number of big businesses and to discuss the establishment of an economy led by SMEs which creates new jobs through innovation and growth,” said chairman of the Korea Federation of SMEs Park Sung-tek.

“We will build up a foundation for a ‘SME-led economy’ for the sustainable and balanced growth of the Korean economy.”

By Sohn Ji-young (jys@heraldcorp.com)