War-torn Iraq represents the most exciting investment opportunity since the Asian tiger economies in the 1970s, according to an adviser to the Iraqi Government, who warned that British companies and investors were in danger of missing out.

Sir Claude Hankes said that Iraq would turn out to be “the economic dynamo for the entire Gulf region” because of its large and growing population, educated middle class and industrious trading culture.

His comments came ahead of a London conference on Thursday supported by the Government and attended by Nouri al-Maliki, the Iraqi Prime Minister, and Lord Mandelson, the Business Secretary.

“Not since the Far East in the 1970s have I seen a market that has the economic potential that Iraq has today,” said Sir Claude, who helped to set up the first Western investment fund for Singapore and Hong Kong when he was a director of Robert Fleming, the investment bank, three decades ago.

“I remember Singapore in the 1970s, when people had nothing, not even water,” said Sir Claude, who believes that Iraq could follow a similarly spectacular economic growth path after years of underinvestment.

Iraq, he said, had a reputation for industriousness and trading that made it stand out in the region, which could not be said of Dubai, Abu Dhabi or Egypt. British companies, however, seemed less alert to the potential opportunities than competitors from other countries, he said. “People will soon lose out in a major way unless they get their act together. We've been slow, that's my perception.”

Sir Claude also hit out at the Government for blocking visa applications from educated Iraqis seeking bona fide training opportunities in the UK. “This has to be addressed,” he said.

Sir Claude is advising the state-owned Trade Bank of Iraq, which he said was attempting to raise a $250 million (£170 million) fund to invest in local Iraqi businesses. TBI, which was set up soon after American tanks rolled into Iraq in 2003, reported a 41 per cent increase in net profits to $359 million on Wednesday with total assets up 64 per cent to $10 billion.

The bank began by issuing letters of credit to facilitate Iraqi trade but is pushing deeper into other areas, such as infrastructure finance, backing projects such as the new Erbil electricity plant, which keeps the lights on in Kurdistani Iraq 24 hours a day. Previously, the Kurds made do with only four hours.

Iraq boasts the world's third-largest oil reserves and is desperate for investment in virtually every sector — from transport and power infrastructure to schools, hospitals, housebuilding and tourism. “There has been no major investment in Iraq since 1990,” Hussein al-Uzri, chairman of TBI, said.

Security, however, remains a major concern for foreign investors. Although suicide bombings are down from the heights of two years ago, parts of the country remain highly dangerous. At least 41 people were killed and more than 70 wounded on Wednesday when car bombs exploded in a busy market of Baghdad's Sadr City slum. Last week 150 people died in two days of bombings amid fears that widespread sectarian violence could return.

“You think it's all chaos,” Sir Claude said. “But the fact is that if you go to Baghdad, which I have done many times, life goes on quite normally.”

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