CAIRO (AFP) -- Egypt and Russia signed a memorandum of understanding on Tuesday to establish an industrial zone on the Mediterranean coast to manufacture Russian automotive, aircraft and engineering products.

The zone "is expected to attract investments of around 550 million dollars and generate 700 million dollars of exports over the next 5 years," a trade ministry statement said.

The memorandum of understanding was signed by Egyptian Trade Minister Rachid Mohamed Rachid and Russian Minister of Industry and Energy Viktor Khristenko.

"Egypt can be Russia's gateway to the region: Russian manufacturers who set up factories in Egypt will gain duty free access to markets in Europe, Africa and the Middle East through Egypt's basket of preferential trade agreements," Rachid said in the statement.

Egypt has adopted a new eastward-looking strategy in recent months, shifting the focus of its trade development from its traditional Western partners.

It signed a string of deals with China and is currently in talks with Russia to reach a free trade agreement. In March, it created a private sector company to boost trade with Kazakhstan.