The Irish prime minister has said a shortage of homes and a need to invest in Ireland’s infrastructure risk being a “drag” on its competitiveness as the country attempts to lure more foreign investment.

Simon Harris said it was time to “cut through bureaucracy … and other things that stifle the delivery” of infrastructure, at a US-Ireland summit at the American ambassador’s residence in Dublin on Tuesday.

A clutch of large US companies, including Apple, Microsoft and Intel, have operations in Ireland and account for 70% of its direct investment. But increased competition from other EU countries and Asia are fuelling fears that the country’s long-term economic future could be imperilled if technology and pharmaceutical companies relocate away.

A chronic shortage of housing has piled pressure on the government, with high demand for rental properties in Dublin, where many tech firms have set up their EU headquarters.

Savills, the property company, recently described the housing crisis in Ireland as “on a different level” from Amsterdam and other EU capitals with pressure on housing.

Ireland’s public transport has also suffered from underinvestment, and it is the only country in western Europe with no metro system.

“One of the biggest issues we must overcome is infrastructural deficits in this country,” Harris said. “These deficits, most of which have emerged due to an extraordinary decade of economic and population growth, do now run the risk of being a drag on competitiveness.

“This is too small a country to have a fragmented approach to the delivery of mega capital projects. We have a huge opportunity now with significant capital budgets, but we’ve got to make sure that these projects are delivered in a much more time-efficient manner.”

Elaine Murphy, president of the American Chamber of Commerce, said she welcomed the taoiseach’s promise that housing and other infrastructure was a priority but that US companies were “watching” for action.

“He is talking about a step change and that is vital for us,” she said. “We are having to white-glove the relationship with corporates, emphasising other areas that we are good at like our diverse talent and research and development, but we are at a juncture. What we need is a narrative to articulate what areas are going to land in the next three years, and the short, medium and long term.”

Allan Mulrooney, head of the Western Development Commission, said companies in the west of Ireland needed “immediate” investment in the energy grid for Mayo, Sligo and Donegal, an electrified rail line from Sligo and an upgraded line from Westport to Dublin.

Ireland’s economic place in the world has been transformed over the past 40 years, with a record corporate tax take of €38bn (£32bn) expected this year, half of which comes from foreign investors and €14bn from an unexpected backpayment of tax from Apple after a European court of justice (ECJ) ruling last month.

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But Ireland’s reliance on multinationals poses a significant risk to the economy and public finances, and the country needs to diversify to shore up present successes, according to a recent national risk assessment report commissioned by the government.

Michael Lohan, the chief executive of Ireland’s foreign investment agency, the Industrial Development Agency (IDA Ireland), insisted that the ECJ’s ruling on Apple last month did not pose a capital flight risk for the country. There was ‘“no indication” of such a development, he said.

He said tax was not the big incentive for investors it once had been, as countries move to a standard 15% minimum corporate tax rate under an agreement with the Organisation for Economic Co-operation and Development in 2021.

He said the “intensity” of competition for foreign direct investment had increased “because of the industrial policy changes … and you have to fight harder to win and sustain projects”.

Lohan said industrial policy was now as big a sales pitch as tax and that countries such as France and Germany were already showing new muscle in targeting the life sciences and semiconductor sectors. He said he hoped to see “significant growth” in the Irish semiconductor industry.