World Bank official says investors eye Mideast

Fallen dictatorships in Egypt and Tunisia have opened up investment opportunities once seen by companies as only available to the politically connected, a top official from the World Bank's political risk insurance arm said on Monday.

James Bond, chief operating officer of the Multilateral Investment Guarantee Agency, said his group had seen a sharp increase in the number of businesses inquiring about political risk coverage and expressing interest in the region, including in the telecommunications sector.

Protests against corruption, high unemployment and rising living costs toppled rulers in Tunisia and Egypt, underscoring the region's political risks but piquing the interest of firms that have sought an opening into these once closed markets.

The region's new leaders have warned, however, that market reforms, including the sale of state assets, may be slowed by widespread distrust by citizens of a political and business environment that benefited only a few.

"Investors felt there was no point even trying and now they're seeing opportunities and thinking maybe they can present a proposal," Bond told Reuters.

"We hope in the best case scenario that these economies will become more open generally, so it will no longer be an economy based on who you know and what your access is," he added.

Bond said until now, nervous investors have withheld investment plans as they watched the unrest spread across the Middle East and North Africa, where there are fears of full-blown civil war in Libya.

"We're seeing in countries like Egypt investors are considering returning, putting their toes back in the water, interested what the investment environment will look like going forward," Bond said.

He said economies across the region have long underperformed and opening them up to foreign direct investment would not only boost growth but also create much needed jobs.

"These economies have underperformed in terms of their economic potential and they have not been seen as being very very interested investment destinations," Bond said.

"One would hope going forward that with what's happening (they will become) much more open economies and resemble some of the more successful middle income economies," he added.

For example, Bond said Egypt exported in one year what South Korea exports in two and a half days.

"This shows that for countries like Egypt, like Tunisia, which are not major oil exporters, there is a huge potential to produce more, to have higher growth rates, to have more employment for the young, and have a better standard of living," he added.