Should the ERP 2.0 System Replace the COE System?


Peter Lin



So, it’s official. The satellite-based ERP system, ominously called ERP 2.0, will become reality come 2020, for a price of $556 million dollars. To add salt to the wound, it will be built by the consortium of NCS and Mitsubishi Heavy Industries.

Just in case you didn’t know, those are the same people who designed and maintained our current ERP gantries, so you know it’ll never break down, especially not when you want them to. We’ve already discussed some of the implications of this new ERP system before, but again, this brings up the hotly discussed topic of the cost of car ownership and car usage in Singapore.


What is the purpose of implementing ERP 2.0?

Officially, this second-generation ERP system is supposed to continue the work of easing traffic congestion in Singapore. The reason why we’re moving to this system is because the existing gantry system is getting more and more expensive to maintain. That’s the official reason. No mention of the fact that each gantry costs $1.5 million dollars, and that we went from 27 gantries to 77 gantries in past two decades since it was implemented.

But Singaporeans are also questioning if there are other agendas behind implementing ERP 2.0. Is it to reduce car usage as Singapore continues its mission to rely less on cars? Is it to just generate even more revenue for the government? Should the ability to track distance travelled, and thus the ability to tax road usage, mean that we can now take the opportunity to reduce the ridiculously high cost of buying a car?


Does it make sense to use ERP 2.0 to tax car usage in general? What about road tax and petrol tax?

Right now, you pay to drive your car in the form of road tax, according to the age of the car and the engine capacity of the car. This is a flat rate that is renewed every six months or a year. It may seem like a pretty hefty amount at first, but when you think about it, it’s really only costing you $1 to $5 a day.

That’s cheap. And really doesn’t do much to ease congestion in Singapore, since everyone’s paying road tax regardless of how much they actually drive.

Petrol taxes on the other hand do little to ease congestion too, since it doesn’t matter when and where you drive – you’re going to be taxed for driving even if you’re not causing any congestion.

On the other hand, using ERP 2.0, the government could easily tax you for each time you drive your car. This will ideally make Singaporeans think twice about using a car unnecessarily, unless we’re willing to pay every time we put our foot on the accelerator.

But Singaporeans would probably complain if this ended up making it more expensive to own a car. What if the government helped to reduce the cost? Like, for example, getting rid of the COE system? That’s what one transport researcher Professor Lee Der-Horng suggested to The Straits Times.


Wait, you can’t be serious… how does getting rid of the COE help reduce the number of cars on the road?

Let’s first take a look at the consequences of removing the COE, once ERP 2.0 has been implemented. At first glance, it makes sense, when you think about it – car congestion is caused by people who drive cars on congested roads, not just by people who buy them. Why then, should Singaporean car owners be penalised if they’re not adding to the congestion in the country?

By removing the COE, all Singaporeans can then own a car, not just those who can afford it. If we use ERP 2.0 to heavily tax car usage, especially at peak periods, these should ideally result in people driving in Singapore only when they need to. This way, everyone can own the car that’s suited to their needs – a family of 5 doesn’t have to squeeze into a cramped sedan simply because they cannot afford a bigger vehicle.

At the same time, because of the high cost of driving a car thanks to ERP 2.0, the satellite-based system can reroute traffic away from congestion-prone areas by making it even more expensive to drive in certain expressways or major roads.


Come on Pete, don’t be naïve…. Reducing or removing COE will only encourage more people to buy and drive a car, regardless of how much ERP 2.0 charges them.

Sadly, that’s probably true. No matter how high ERP 2.0 charges are, Singaporeans are probably still willing to pay the high fees if it means getting rid of COE. The familiar story of boiling a frog in a pot explains this. If you were to put a frog in boiling water, the poor creature will jump out immediately. But if you put a frog in warm water, then slowly increase the heat, the frog will be cooked without realising it.

In the same way, it’s the current high COE prices that are effectively deterring Singaporeans from owning a car now. Even if the high ERP 2.0 costs eventually end up equalling the price of COE after several years, Singaporean drivers would still buy cars first, and then worry about how often they drive later.

ERP 2.0 therefore, would probably be a good replacement for road taxes and petrol taxes, but we’re going to have to disagree with transport researcher Professor Lee that it should replace the COE.

At the end of the day, it seems the real solution to reducing car congestion is to make it difficult to buy a car in the first place. And to that extent, the COE seems like it’s here to stay. That said, the government still needs to look into overhauling the current COE system, so that its purpose of reducing the volume of cars in Singapore doesn’t include the side effect of increasing the profit margins of car dealers and being a system that only really benefits the rich in Singapore.

What are your thoughts on the ERP 2.0 system? We want to hear from you.

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Peter Lin

I am the poster boy for reinventing one's self. I've been a broadcast journalist, technical writer, banking customer service officer and a Catholic friar. My life experiences have made me the most cynical idealist you'll ever meet, which is why I'm also the co-founder of a local pop culture website. I believe ignorance is not bliss, and that money is the root of all evil only if you allow it to be.

  • Prime

    Totally agreed, pay as you drive. Zero tax drive away with car. I have imagined this scenario – Car comes without COE and all taxes, when you start the car, you need to key in your destination, the system will estimate your ERP cost base on road congestion. Your actual road usage and road congestion will be charged accordingly. So you could pay $1 for tax at 3am and pay $100 to drive during super peak hour. This should of course be applied to all moving things on the road.

  • Neo Alex

    hi ! I like share my opinion as I travel a lot in Asia and many other cities and firstly , I think we should make some study on other countries that are well known for traffic jammed. To my opinion in all city centre or places in the world that people must work , play or shop there is no way any person or Smart Technology that any Gov will have a Solution to stop such people driving into the cities as this is a must even if the shopping will to increase parking rates or ERP will rise the charge too as people have a needs.
    For example in Bangkok or Shenzhen which is a City that consist of more than 10 Million people who drive in the City everyday , I have never see in my last 20 years I travelled that their Gov is implementing ERP or COE since Singapore is a well known country in the World that this Gov will like learnt from us and yet they did not.
    In Bangkok that I know the Traffic department have successfully ease traffic congestion in major road in Bangkok like SIlom similar to Orchard of Singapore by broadening and diverting some road instead of 2 ways traffic they become 1 way traffic during peak period , so that the Shoppers can entre into the Home , Office , Shopping districts in ease and Traffic police will be deploy only during this hours to control and guide the drivers and direct them so traffic will move smoothly , these was done free for all drivers without having to pay COE or ERP and yet problem is solved. For example to ease parking problem in Shopping , all shopping centre have Security person deployed to also guide their driver where parking is available and they have formulate a parking system that they can park their car across cars that are already parked in available lots and they should leave their car break free so when the owner of the Car in the lots wants to comes out they can just push your car aside , the Security person will assist the driver and ensure lots are filled.
    So we should learnt from Bangkok for examples to utilize our traffic police or related Gov resource to study such solution that can be implemented in a small city like Singapore.
    Another Cash free solution to control people from buying a car is to implementation a by Law like we did in some Condo that every household is allow to Park 1 Car in the estate as the estate have only 20 lots so however amount any owner willing to pay to buy or rent a lot it is not possible or allow. So LTA should have a by Law every household no matter how many members in the family they are only allow to own 1 Car , a Saloon or a MPB depends on the Family size . no matter how RICH you are ? Second car will need LTA approval base on the condition and reason given why a second car is needed since for example if this family have a MRT just right outside their home so LTA should not approved this family for second car as that is the purpose of Gov to invest in MRT and discourage families from owning extra car in a Family. So the families will have to share their Cars for work or play and organize their time for the Car so Owner can fully Utilize the purpose of buying a Car.
    Hope that this experience I had and Solution make sense and we can still be a smart nation without having to spend more for Smart system that does not worth the investment and that is what I consider a Smart system which ease problem and yet we can safe money for better good use for our family to have more Children or better Schools instead of spending all our money to pay ERP or COE which does not make any good for the Nation which is already named to be the No, 1 most costly country 3 years straight due to the cost in personal Transport the CAR expense have attributed and yet we cannot STOP these families to own because to some is Dream and to some is a Needs and to some is just simply doing what their friends or relative is doing, So I guess such CASH free solution or rather simple yet effective solutions should be studied to ease traffic in a Smart way.