Singapore’s Road Pricing Journey– Lessons Learnt and Way Forward
Singapore’s Road Pricing Journey–
Lessons Learnt and Way Forward
A P Gopinath MENON and Nadiah LOH
Abstract
Singapore was the first city in the world to manage traffic congestion using road pricing.
This dates back to 1975 when the government made the bold move of implementing the
Area Licensing Scheme (ALS) to curb worsening traffic congestion in the city centre. ALS was
the manual precursor to the existing Electronic Road Pricing (ERP) scheme implemented
23 years later. This article provides a brief history of road pricing in Singapore, the lessons
learnt and the way forward.
Introduction
Rapid development and population growth
have led to burgeoning travel demand in
Singapore. As incomes grew and people became
more affluent, car usage became a more popular
travel mode. While significant improvements
have been made to public transportation over
the last 50 years, private motorised transport
remains a significant travel mode. The 2012
Household Interview Travel Survey (HITS) found
that about 4.8 out of the total 12.5 million
trips in 2012, were made by private transport.
As seen in Figure 1, the rate of car population
growth has consistently exceeded the growth
in resident population and growth in road
network. According to HITS 2012, 46% of
households owned cars in 2012, compared to
40% in 2008, and 38% in 2004.
The 2012 Household Interview Travel
Survey (HITS) found that about 4.8
out of the total 12.5 million trips in
2012, were made by private transport.
46% of households owned cars in
2012, compared to 40% in 2008, and
38% in 2004.
18
Figure 1: Resident population, car population, road network
in Singapore index, 1975=100
Source: Land Transport Authority, 2015; Department of
Statistics Singapore, 2015
What Led the Government to
Implement such an Unpopular
Scheme?
State and City Planning (SCP) Project,
1967- 1971
The ALS idea was born in the late 1960s when
the State and City Planning (SCP) project, a joint
project by the United Nations Development
Programme and Singapore government,
was commissioned to study local urban
development and land transportation needs. It
JOURNEYS | November 2015
Singapore’s Road Pricing Journey– Lessons Learnt and Way Forward
concluded that physical land constraints faced
by Singapore were not able to accommodate
more roads to meet the rise in transportation
demands. Completed in 1971, the study
recommended an efficient public transport
system by means of a rail transit system by
1992. A wholly “car-oriented” transport
policy would take up too much land and be in
conflict with basic planning objectives.
Rising Population, Economic Growth and
Travel Demand
In spite of the significant investments and
improvements made to public transportation
over the last 50 years, car ownership remains
a status symbol and many Singaporeans aspire
to own one. This presents the Government
with a familiar big city conundrum – meeting
the aspirations of motorists while having less
scope to increase the road network in years
to come.
... car ownership remains a status
symbol and many Singaporeans
aspire to own one.
With this in mind, the Government has put in
place a combination of ownership and usage
measures to manage road use. Although
ownership measures are effective in controlling
vehicle population growth, usage measures
are needed to counter what behavioural
economists’ term as “the sunk cost effect”.
Given the high costs of ownership, car owners
tend to have a higher propensity to maximise
the value of their cars by driving whenever
possible. Thus, relying on high ownership
cost is not enough. Usage charges are, thus,
equally important to manage the demand for
road space.
Given the high costs of ownership,
car owners tend to have a higher
propensity to maximise the value
of their cars by driving whenever
possible.
A Brief History of Road Pricing in
Singapore
Manual Schemes - The Area Licensing
Scheme (ALS) and Road Pricing Scheme
(RPS)
The ALS was a cordon pricing system
introduced in 1975 as a usage restraint
measure to control traffic congestion in the
Central Business District (CBD) during peak
hours. A virtual cordon was set up around
the most congested parts of the CBD. The
cordoned area, called the Restricted Zone
(RZ), was demarcated by overhead gantry
signs (Figure 2). During the Restricted Hours,
a paper licence had to be purchased and
displayed on the vehicle windscreen to enter
the Restricted Zone. Enforcement personnel
were stationed at all gantry points and sales
staff at roadside licence sales booths located
on the approach roads to the RZ. Licences
could also be purchased at petrol stations,
post offices and convenience stores.
A virtual cordon was set up around
the most congested parts of the CBD.
JOURNEYS | November 2015
19
Singapore’s Road Pricing Journey– Lessons Learnt and Way Forward
Figure 2: Area licensing scheme in operation
Source: Land Transport Authority
Initially, the scheme was restricted to
passenger cars and taxis with less than 4
occupants during the morning peak hours
from 7.30am to 9.30am. All other vehicles,
such as motorcycles and goods vehicles, were
exempted. Several refinements were made
over the years to better manage congestion.
For example, in 1989, the ALS was extended
to cover all vehicles, except emergency
vehicles (e.g., ambulances and fire engines)
and public buses. Car and taxi pools were
no longer exempted. This was deemed to
be more equitable as all vehicles contributed
to the congestion in the area and all should
therefore be subject to the same restraints.
However given that restraints would be placed
on all vehicles, this also meant that a milder
levy would be sufficient. The ALS fees were
thus reduced by 40% to $3 per day and
$60 per month. The Restricted Hours were
extended to include the evening peak hours
between 4.30pm and 7.00pm because of
worsening traffic conditions. Five years later,
20
the Restricted Hours were further extended to
full days, with peak and off-peak differential
pricing. The objective of the changes was to
spread out traffic flow more evenly throughout
the day, so that the roads were better utilised
but without congestion.
... all vehicles contributed to the
congestion in the area and all should
therefore be subject to the same
restraints.
When the ALS first started, the RZ had an area
of only 610 hectares; but with the expansion of
the CBD, it increased to 720 hectares over the
next 14 years. Prior to its replacement by the
ERP system in 1998, the RZ was demarcated by
31 overhead gantry signs at its control points.
In 1995, the manual road pricing scheme
was extended to expressways. Known as the
Road Pricing Scheme (RPS), it was meant as
a pilot scheme to introduce the idea of road
JOURNEYS | November 2015
Singapore’s Road Pricing Journey– Lessons Learnt and Way Forward
pricing at other congested points outside the
RZ. It also served to familiarise motorists with
passage pricing as opposed to area or cordon
pricing of the ALS.
... RZ had an area of only 610 hectares;
but with the expansion of the CBD,
it increased to 720 hectares over the
next 14 years.
When the ALS was introduced, it had a
dramatic effect on traffic entering the RZ.
Traffic volume dropped by 44%, and crept
down to 31% by 1988. This was despite
growth by a third in employment in the city
and by 77% in vehicle population during the
same period. The drop in traffic was caused by
the decanting of motorists whose destinations
were not the city itself but had merely been
using the city roads as a bypass, as well as by
those who changed their journey start time to
avoid paying the ALS fees.
Traffic volume dropped by 44%, and
crept down to 31% by 1988...
Shortcomings of the Manual Schemes
Being manual schemes, the ALS and RPS had
certain limitations. Firstly, they were labour
intensive; requiring enforcement personnel
at all the gantry points and officers at the
dedicated licence sales booths. Extending the
schemes to other points would have needed
even more people to run them. Moreover,
over the years, numerous types of licences
were introduced for different areas (e.g., on
They were labour intensive; requiring
enforcement personnel at all the
gantry points and officers at the
dedicated licence sales booths.
expressways), different times of the day (peak/
off-peak), and for different types of vehicles
throughout the day. The myriad of licences
available was confusing for motorists, and
made enforcement more difficult. Human
enforcement by visual means was prone
to error leading occasionally to wrongful
summonses being issued. This made changes
to and extension of the ALS scheme very
difficult.
Human enforcement by visual
means was prone to error leading
occasionally to wrongful summonses
being issued.
Furthermore, as the licence was a flat fee for
unlimited entries, the ALS was not equitable
to motorists because the charges were not
commensurate with the congestion caused
(e.g., if a vehicle entered the RZ many times a
day). And although licences were not legally
transferable between vehicles, it was tempting
for motorists to do this and difficult for the
authorities to enforce against.
Although licences were not legally
transferable between vehicles, it was
tempting for motorists to do this and
difficult for the authorities to enforce
against.
JOURNEYS | November 2015
21
There was always a rush to enter the RZ just
before or after the restricted hours because of
the sudden change of licence fee from zero
to $3 or vice versa. This resulted in sharp and
short peaks of traffic volume entering the RZ.
“Shoulder-charging”, or having intermediate
rates, would have smoothened out the peaks,
but this was difficult to implement in a manual
system. Having more categories of licences
would also make enforcement more difficult
and more prone to mistakes.
Electronic Road Pricing (ERP)
With the shortcomings of the manual road
pricing schemes, the search for a more efficient
technology began in earnest before 1990. In
July 1989, the Government announced that it
would implement ERP. Study missions were
sent to the USA and Europe where forms of
electronic pricing had been implemented for
road toll systems. However, although the
relevant technology required for ERP had
been developed, there were no ready offthe-shelf ERP systems which met Singapore’s
requirements to charge vehicles travelling in
a multi-lane environment. Singapore’s ERP
system was, therefore, to be the first of its
kind in the world.
With the shortcomings of the manual
road pricing schemes, the search for
a more efficient technology began in
earnest before 1990.
The ERP system was finally implemented in
1998. It was essentially an automated version
of the ALS, with the flexibility to vary charges
22
Singapore’s ERP system was, therefore, to be the first of its kind in the
world.
at different times and places according to
traffic conditions. This provided for more
efficient control of congestion, and presented
the opportunity to use road pricing much
more extensively as a traffic management
tool. When the ERP system was implemented,
it was to replace the manual road pricing
systems like the ALS in the first instance, and
then gradually to extend further to other areas
of congestion.
The ERP system was designed to be simple to
use. All that it required of the user is to insert
the smart-card with stored value into the invehicle unit (IU). When the vehicle passes
through the ERP gantry, the appropriate
ERP charge is deducted from the smart-card
(Figure 3). If there is insufficient cash in the
smart-card or no smart-card in the IU, the
enforcement cameras in the gantry will take a
picture of the rear of the vehicle. The ERP was
designed as a pay-as-you-use system, where
motorists pay each time they pass a gantry.
Charges are set in 30-minute blocks and the
rate for each block at each location is adjusted
periodically based on the traffic conditions
in the vicinity of the road-pricing point for
each time period. This is a more refined and
equitable form of usage charging than the
The ERP system was designed to be
simple to use.
JOURNEYS | November 2015
Figure 3: How the ERP works
Source: Land Transport Authority
ALS, which had encouraged a buffet syndrome
by allowing a motorist to make as many trips
as he wanted across any gantry using the Area
Licence for the day.
The ERP was designed as a pay-asyou-use system, where motorists pay
each time they pass a gantry.
Effect on Traffic Volumes
After the change from ALS to ERP, there
were significant reductions in the number of
vehicles entering the RZ during the morning
peak hours and for the whole day compared
to the manual ALS system. Since then, many
changes have been made in terms of timings
of operations, the area of operations, new
ERP points within the RZ, and different times
of operations for different gantries in the 3
different cordons within the RZ.
The impact of road pricing on traffic volumes
to the CBD during morning peak hours can
be seen in Figure 4. Traffic volume has stayed
below 1975 levels in spite of rapid growth
in car population. From 2005, because of
immigration, the city area with employment
has increased and there are many more roads
within it. Despite this, traffic conditions still
remain manageable within the CBD. Singapore
enjoys some of the highest peak hour speeds1.
This is also helped by the improvements made
to public transportation over the years which
have led to more trips into the CBD being
made by bus or MRT.
Traffic volume has stayed below 1975
levels in spite of rapid growth in car
population.
JOURNEYS | November 2015
23
Singapore’s Road Pricing Journey– Lessons Learnt and Way Forward
Figure 4: Effect of road pricing on traffic volume to the city. Index, 1975 before ALS implementation =100
Source: Land Transport Authority, 2015; Department of Statistics Singapore, 2015
Lessons Learnt from Implementing
Road Congestion Policies
Forward Looking Leadership and Holistic
Transport Strategy
From 1975 to 2003, Singapore had the only
congestion pricing system in the world. Much
has been written about it, both in a positive
and negative manner. It was often said that
only Singapore with its draconian laws and
stiff controls could implement such a scheme.
That is no more true and many transport
pundits are now proposing congestion pricing
as inevitable in many cities. Perhaps Singapore
was three decades ahead of the pundits.
From 1975 to 2003, Singapore had
the only congestion pricing system in
the world.
24
Perhaps Singapore was three decades
ahead of the pundits.
“By 1975 traffic jams at peak hours were
unbearable. I had read a paper proposing
that, to reduce congestion, we charge a fee
for cars entering the CBD at peak hours.
I asked our officials to examine this idea.
They found it feasible. They proposed
gantries with notices to warn all motorists
entering the Area Licensing System (ALS)
which covered the CBD at a restricted time,
to display a licence on their windscreen.
I had the plan discussed publicly in the
media for several months. We refined the
proposals, for example, allowing cars with
four passengers to go through without a
licence and settling for a charge of S$3 per
JOURNEYS | November 2015
Singapore’s Road Pricing Journey– Lessons Learnt and Way Forward
day, less if bought on a monthly basis. The
plan eased rush hour traffic jams and was
well received.”
Mr Lee Kuan Yew, first Prime Minister
of Singapore (1959 – 1990) Quoted
from (Lee 2000)
Tackling congestion in any city is no easy feat.
Singapore was fortunate to have the strong
leadership that had the foresight to implement
these tough measures early. Apart from this,
an inter-ministerial Road Transport Action
Committee (RTAC) was formed as early as
1973 to formulate a holistic transport policy to
guide the development of Singapore into the
future. The RTAC came up with the five-pillar
transport strategy which still remains relevant
today:
- Integrated land-use and transport planning;
- Construction of a modest road network;
- Traffic management to maximise utilisation
of roads;
- Improvement to public transport; and
- Travel Demand Management
Singapore was fortunate to have
the strong leadership that had the
foresight to implement these tough
measures early.
Thus, forward looking leadership and holistic
transport strategy has been effective in
managing congestion in Singapore. The
measures to manage travel demand go hand
in hand with measures to improve public
transportation.
The measures to manage travel
demand go hand in hand with
measures to improve public transportation.
Ensuring Robustness of System
Prior to its implementation, the ERP system
went through several rounds of system
evaluation tests (SET) – demonstration projects
for the companies tendering for the job. The
entire SET lasted 15 months to ensure that
the prototype systems underwent rigorous
and intensive testing to verify the workability
of the system before deciding on the best
technological solution.
... the prototype systems underwent
rigorous and intensive testing to
verify the workability of the
system before deciding on the best
technological solution.
A System Qualification Test (SQT) was also
carried out before the contractor that was
awarded the ERP tender was allowed to start
with the manufacture of the equipment. The
public was also invited to the rigorous rounds
of testing to gather feedback on the userfriendliness and features of the system. The
8-month SQT was helpful in surfacing system
weaknesses, as the system had not been tried
out elsewhere in the world, and allowed public
concerns to be tested and addressed. This
allowed time to ensure the technical reliability
of the system and address system bugs before
the system was implemented.
JOURNEYS | November 2015
25
Singapore’s Road Pricing Journey– Lessons Learnt and Way Forward
The public was also invited to the
rigorous rounds of testing to gather
feedback on the user-friendliness
and features of the system.
Another objective of the vehicle
tax changes was to win over public
confidence and assure the public
that there was no fiscal agenda in
introduction of ERP.
Managing Public Expectations
Packaging the Introduction of ERP with
Vehicle Tax Rationalisation
When the ERP was implemented in 1998,
the Government rationalised the vehicle tax
structure to reflect the shift towards higher
reliance on usage measures to control traffic
congestion. This was achieved by reducing
upfront vehicle taxes, such as the registration
fee, Additional Registration Fee and the road
taxes on vehicles. The changes also aimed for a
more consistent vehicle tax structure, based on
road space occupied (and hence contribution
to congestion) after giving proper regard to
social and equity considerations. With the
introduction of ERP, the Government sought
to strike a good balance between ownership
and usage restraint measures.
Another objective of the vehicle tax changes
was to win over public confidence and assure
the public that there was no fiscal agenda in
introduction of ERP, such as revenue objectives.
Therefore, the Government bore the entire
upfront development and implementation
cost, and on top of providing tax incentives,
the IUs (including installation) were provided
free of charge to owners of all existing vehicles.
All vehicle owners benefitted from the
reduction of vehicle ownership taxes. In
addition, a package of road tax rebates was
also given to them for a period of 5 years.
Together with the reduction in ownership
taxes, these measures significantly eased the
introduction of ERP by helping motorists adjust
to the new usage-based ERP charges.
Since the implementation of ERP, the
Government has continued to lower the ARF
for cars, in line with the policy to lower upfront
taxes as the Government moved to a more
usage based congestion management regime.
Manage the Impact on businesses
In implementing the ERP, the Government also
took into consideration the potential impact
on businesses. Therefore, in addition to the
tax rationalisation and rebate measures, the
ERP charges for commercial vehicles, i.e.,
buses and goods vehicles, were phased in
over a period of 4 years, while that for taxis
were phased in over a period of 3 years. These
measures served to enable businesses to better
adjust to the usage-based charging system.
Figure 5 outlines some of the lessons learnt
from Singapore’s road pricing experience.
26
JOURNEYS | November 2015
Singapore’s Road Pricing Journey– Lessons Learnt and Way Forward
Figure 5: Lessons learnt from Singapore’s road pricing experience
Source: Menon, 2015
Way Forward
In the future, we can expect to see more
innovative ways of road pricing. Singapore has
been exploring more cost and space efficient
ways to manage traffic. In 2006, LTA tested
the accuracy of the Global Positioning System
(GPS) as a way of electronically collecting toll.
However, the large margin of error rendered
the technology unfeasible at that stage. In
2011, a SET was launched to help identify a
technological solution for the next generation
ERP system. Following the conclusion of the
SET, LTA called a tender in 2014 to develop
Singapore’s next generation ERP based on
Global Navigation Satellite System (GNSS)
technology.
JOURNEYS | November 2015
27
Singapore’s Road Pricing Journey– Lessons Learnt and Way Forward
This new system will overcome the constraints
of physical gantries, which are costly to
maintain and take up valuable land space. A
key advantage of the new system is the ability
to implement distance-based pricing along
the congested roads where road pricing is to
be implemented. Distance-based pricing, as
opposed to the current gantry-based system,
is more equitable as motorists will be charged
proportionate to the distance travelled on
these congested roads.
Notes
1
The average speed in the CBD/Arterial Roads
during peak hours, i.e., average of AM ( 8-9am) and
PM (6-7pm) peak in 2014 is 28.9 Km/hour.
References
Department of Statistics, Singapore. Singapore, October
14, 2015.
Land Transport Authority. Four Consortia to Conduct
System EvaluationTest for Next Generation Electronic Road
Pricing System. Singapore, May 24, 2011.
Land Transport Authority. Household Interview Travel
Survey 2012: Public Transport Mode Share Rises TO 63%.
Singapore, October 7, 2013.
28
Land Transport Authority. LTA Calls Tender to Develop Next
Generation Road Pricing System. Singapore, October 1,
2014.
Lee, Kuan Yew. From Third World To First. The Singapore
Story: 1965-2000. Singapore: Times Media, 2000.
Menon, A P Gopinath. Mitigating Congestion - Singapore’s
Road Pricing Journey. Singapore: LTA Academy, Land
Transport Authority, 2015.
JOURNEYS | November 2015
Singapore’s Road Pricing Journey– Lessons Learnt and Way Forward
A P Gopinath Menon was with the Public Works Department and
Land Transport Authority for over 35 years. He served as Chief Transport
Engineer in LTA from 1991 to 2001. Menon has been involved in all major
traffic management schemes since the 1970’s, which include the Area
Licensing Scheme, the Electronic Road Pricing scheme, Intelligent Transport
Systems, Bus Priority scheme and Road Safety engineering. He retired from
public service in 2001 and is currently a Council Member of the Singapore
Road Safety Council and a Board Member of the Public Transport Council.
Nadiah Loh is a Senior Researcher in the Knowledge Management
Division of the Land Transport Authority, Singapore. She graduated with
an Honours degree in Economics from the National University of Singapore
and joined LTA in 2012. Prior to joining LTA, Nadiah was a policy analyst
with the Singapore Public Service Division, Prime Minister’s Office.
JOURNEYS | November 2015
29