Sep 22, 2005. /Lesprom Network/. Vietnam has completed the first phase of a project to plant 5 million hectares of new forests, raising the country's forest coverage from 33% in 1998 to more than 37% in 2005, said the ministry of agriculture and rural development. The success has helped to meet partially domestic demand for wood, generate jobs for many laborers and improve incomes of rural mountainous households. The project has planted over 1.7 million hectares of new forests including 1.2 million hectares of preventive and special forests. The seven-year phase, which had a total investment of VND4 trillion ($253.16 million), has also allocated 2.4 million hectares of forests to families. The 2005-2010 period of the project, however, is forecast to face a lot of difficulties. Although the project is expected to grow between 200 000-230 000 hectares of forest per year, the country currently afforests 100 000 hectares of forests. The stagnation is ascribed to the lack of capital resulting from cumbersome procedures in granting loans to the project's investors. The project targets to cultivate 3 million hectares of production forests and 2 million hectares of protective and special forests by 2010. In order to fulfill the target the ministry has asked relevant agencies to make efforts to deal with the challenges. Afforestation projects and programs to boost paper production and forest product processing industries should be implemented in a combinative form, added the ministry. Moreover, the forestry industry has been required to upgrade and build research centers to produce new varieties by using high technology in particular ecological areas with a view to sufficiently providing original saplings for farmers. Vietnam's forest coverage reached 36.2% by the end of 2004, and is expected to increase to 38-39% by 2010.