SINGAPORE — Any move to start charging motorists by distance travelled under the next-generation Electronic Road Pricing (ERP) system will have significant policy implications, including how it would affect industries like transportation services and logistics providers.

Other ramifications could include the need to relook vehicle taxes and petrol duties to align with a policy shift to charge motorists more equitably based on mileage rather than vehicle ownership or usage of certain roads. 

The experts also note that it is unclear how accurate satellite-based tracking will be, given Singapore’s high building density, especially in the Central Business District, and network of road tunnels.

They add that these complex implications and technical issues, as well as Singaporeans’ concerns about possibly paying more for car usage, could be why the authorities said on Monday (Oct 23) that there are “no immediate plans to introduce distance-based charging”. 

This is even though the Land Transport Authority (LTA) announced on Monday that from Nov 1, vehicles will be progressively fitted with a mandatory on-board unit for ERP 2.0, starting with fleet vehicles such as those registered to a company or organisation.

Privately owned cars will have the new unit installed in batches from next year. 

The on-board unit has to replace the current in-vehicle unit because ERP 2.0 uses a Global Navigation Satellite (GPS) System and hence requires different hardware.

The LTA first announced ERP 2.0 in 2014 and highlighted its potential for distance-based charging.

In 2020, then-Transport Minister Ong Ye Kung said that such a scheme is a “significant policy change” that requires close studying. Then, experts had also raised concerns about whether the system could handle Singapore’s roughly one million vehicle population and the pricing policy framework of distance-based charges.

IMPACT OF DISTANCE-BASED CHARGING ON WALLETS, POLICY

Experts told TODAY on Tuesday that existing policies around car ownership and usage will need to be reviewed and adjusted should distance-based charging be implemented.

Associate Professor Walter Theseira, who teaches economics at the Singapore University of Social Sciences and is a former Nominated Member of Parliament, said that road pricing can be a “potent problem” politically.

Like other experts, he noted that distance-based charging would make ERP more equitable as motorists are charged for their road usage, rather than a flat fee when they go past a certain point.

“Politically, you can’t implement (distance-based charging) without concession and offset in taxes, if not people will be unhappy. They will see it as an increase in tax burden,” said Assoc Prof Theseira.

He added that potentially, road taxes and petrol duty taxes could be reviewed with distance-based charging. 

Currently, all motorists have to pay a road tax that is based on their vehicles’ engine capacity and age, regardless of mileage accrued. 

While distance-based charges might be fairer for motorists, transport engineering consultant Gopinath Menon said pushback is to be expected.

“People are always worried as they fear that when something new comes up, they might be charged more,” said Mr Menon, who was previously chief transportation engineer at LTA and oversaw the implementation of the current ERP system in the 90s.

“So we need to gradually ease into new systems and get used to the technology first.”

Associate Professor Raymond Ong of the National University of Singapore said that as it stands, there will be questions about whether Singapore motorists are ready for a new method of road use charging, given the already high costs of car ownership and a perception that they may have to pay more under a distance-based road pricing regime.

“So what kind of modality of car ownership and usage will we see in the future, especially if we are pushing for a car-lite society? Are people receptive to this?”

He suggested that studies and public engagement sessions be done prior to the rollout of such a scheme.

Dr Terence Fan, an assistant professor of strategy and entrepreneurship at Singapore Management University, added that distance-based charges might also affect employees of companies based in pockets of industrial estates with little public transportation infrastructure, such as Jurong Island.

This is if distance-based charging is implemented across all roads in Singapore.

“The main aim of ERP (is) to ensure roads are smooth running. But for some, if you don’t drive, there may be little alternatives for transport,” he said. “This might mean higher costs for some who might need to drive around.”

Besides these policies, Assoc Prof Ong also noted that there might be questions about how distance-based charges might impact other industries that rely on road use.

“(Distance-based charging) is going to affect almost everything. It will affect our delivieries, transportation services and more,” he said.

Such industries typically clock high mileage and thus distanced-based charging might impact their cost. Hence, the impact to consumers needs to be studied carefully, said Assoc Prof Ong.

QUESTIONS ABOUT TECH RELIABILITY

Beyond policy, experts added that more testing needs to be done to ensure ERP 2.0 is accurate enough to charge motorists based on the distance they travel.

While distance-based charging using a GPS System is not new — some countries in Europe use it to charge heavy-duty vehicles — its accuracy in urban settings which are building dense is unclear.

Dr Ong added that the need to test the technology might be a reason on-board units are being installed in fleet vehicles first, before privately owned vehicles.

“Without the pilot, we cannot understand real-life implementation and accuracy issues we might face,” he said.

“If it is not accurate, distance-based charging would be an issue.”

On this note, Assoc Prof Theseira said that ERP 2.0 could be used to charge vehicles for the distance travelled within certain congested areas rather than island-wide. If so, the GPS system has to be spot on to ensure that motorists are charged accurately.

“If you turn right and it’s an area where you’ll be charged for, but you are going straight, ERP 2.0 must have a certain degree of accuracy to ensure you aren’t wrongly charged,” he said. 

Mr Menon believes that authorities will likely take their time in the implementation of ERP 2.0 and distance-based charging.

“ERP as it stands now has served us well for 25 years. It is likely the same philosophy back in 1995 as now, that we need to gradually move to get used to the technology first and make sure the system is working,” he said.