Daewoo Heavy Industries and Machinery Ltd will use a Turkish production line to manufacture forklifts for the Middle East and Eastern Europe.

The Korea Herald newspaper said Daewoo Heavy had signed a memorandum of understanding with Turkish industrial truck and construction machinery firm Sanko Holding Co.

Under the agreement, Daewoo will supply parts for the assembly of forklifts by Sanko, starting in October.

Daewoo Heavy's current forklift market shares in the Middle East and Eastern Europe are 15 per cent and eight per cent respectively, and it is number one in Turkey, with a market share of 20 per cent, the company said in a statement.

"(The) agreement on the partnership is meaningful as it took place ahead of President Roh Moo-hyun's visit to Turkey slated for mid-April. We expect the tie to help enhance our brand image in the Middle East and Eastern Europe," a Daewoo Heavy spokesman said.

The company said it would make six kinds of two-to-three-ton engine-type forklifts and start selling them by year-end at Sanko's facilities in Gaziantep, southern Turkey.

The overseas production base is expected to offset rising expenses due to high material costs and appreciation of the Korean currency against the dollar.