Effective implementation of the National Development Plan is critical to prevent growth in the economy being choked and environmental quality being damaged, Mr John Travers, chief executive of Forfas, said yesterday.

Introducing Forfas's 1999 Review and 2000 Outlook Statement, Mr Travers warned that unforeseen growth rates had given rise to major problems such as inadequate roads, poor public transport, congestion and high house prices that could curtail the development of enterprise. He said remedying these required an upgrading in the delivery system right across the public sector, including the urgent implementation of the draft Planning and Development Bill, 1999. The success of the £40 billion (€50.8 billion) investment in the National Development Plan depended, to a significant extent, on improvements in the planning process, he added.

The report outlines several potential threats to the Republic's economic competitiveness including the skills shortage. "There is a serious imbalance in the supply and demand for people with advanced qualifications in scientific research," the report states.

On the issue of regulation and competition, the report argues for the adoption of common principles which ensure co-ordination. Putting in place the required legal and regulatory environment in e-business quickly could put the Republic at a competitive advantage, the report argues.

However, Ireland's relatively high VAT rate of 21 per cent could give rise to competitive disadvantages in promoting cross-Border e-business activities. The report argues Government should seek to influence the upcoming EU directive to apply VAT rates of the state in which services are consumed rather than purchased.

Many companies have done little to prepare for the introduction of the euro on January 1st, 2002, the report warns. This could lead to a shortage of critical support services for firms.