Monday, April 15, 2013

Singapore Traffic Congestion Solution : Pricing Pricing Pricing!

Traffic congestion is one of the most prevalent and vexing characteristics associated with major cities. Every city tries to manage the traffic congestion depending on the population, geographical, cultural, and political and of course, most important the economic background of that city/state.  In this blog we will discuss the  the approach that Singapore government chose to deal with the traffic congestion problem.  Some of them worked, and some of them need to be modified with the changing times and generation.

In early 70’s Singapore faced grave congestion problems. It was time of transition for Singapore as they were emerging as a strong economical market. Increasing vehicles on the road were result of the urban Singapore and growing affluence of the Singaporeans. The Singapore government chose to deal with the problem by providing an efficient public transport system to accommodate present and satisfy future population demand. And to complement this mode, another approach considered was curtailing the number of vehicles on the road. This blog is presenting the bold policies that were implemented by the city of Singapore to manage the traffic demand on the road.

One of the important and probably the most efficient solution for the city of Singapore to curb the congestion was road pricing. Singapore was the first country/city in the world to manage the vehicle demand by pricing. It started in 1975 under the title of Area Licensing System (ALS). ALS was initially active in highly congested areas like Central Business District (CBD) designated as Restricted Zones. With increasing traffic and the expansion of urban center through the city ALS was replaced by Electronic Road Pricing (ERP) in 1995, making it advanced, faster and more efficient. The concept behind ERP is to pay as per the use road. Charging/taxing is done as per the time, location and the traffic flow. ERP pricing varies from S$0 up to maximum S$5. Taxing may make people choose other transport options or choose another route thus alleviating the stress on the congested route. The rates are revised semi-annually during June and December. This is how ERP system works: Citizens owning a car are required to install an In-Vehicle Unit (IU) in the car.
A cash card is inserted in the IU. When a vehicle passes through an ERP gantry, the amount charged is deducted from the cash card. Based on an optimal speed range of 20-30 km/h on arterial roads and 45-65 km/h on expressways, ERP rates will be adjusted accordingly.

 It is no wonder that ERP system is unpopular with the people of Singapore. People refer it as “Everyday Rob People”. However it has been active since 1975 (initially as ALS and ERP after 1995) and has played a vital role in controlling traffic congestion. As per LTA report ERP has resulted in reduced number of vehicles on the road during peak hours, speed of vehicle has increased and more people are opting for carpooling over individual vehicle driving.

Although ERP contributed in managing traffic congestion, with increasing number of vehicles ERP would have proven inadequate in future. As a result LTA came up with another innovative and bold approach VQS-Vehicle Quota System, which was implemented in May 1990. Before VQS was implemented, owning a vehicle was and still is extremely expensive. The total cost of vehicle included open market value (OMV), import duty (ID), goods and service tax (GST), registration fee (RF), additional registration fee (ARF) and annual road tax (ART). Despite the taxes the population of vehicles on the road was increasing (164,500 in 1980 to 271,200 in 1989). After the VQS was implemented, 41,000 fewer vehicles were registered between 1990 and 1993.

As per LTA, The Vehicle Quota System (VQS) regulates the rate of growth of vehicles on the roads of Singapore, at a rate that can be sustained by developments in land transport infrastructure. Under the VQS prospective vehicle owner is required to bid for and buy a certificate of entitlement (COE). COE is another cost in addition to the taxes mentioned above. Once allotted, COE is valid for ten years, after then the owner can choose to scrap the vehicle or apply for renewal of COE. Bidding for COE is performed twice a month. The number of COEs allotted depends on: actual number of vehicles taken off the road, allowable growth in vehicle population (0.5% for current year) and adjustments from temporary COEs.

The ERP and the VQS has proven to be bold, although successful in managing the traffic congestion in Singapore. Both the options described above are compatible with each other and make owning a vehicle a cumbersome process along with being expensive. As a result, fewer vehicle run on the roads achieving free flowing highways. Availability of land space is one of the biggest constraints in expanding current roads of Singapore. This problem is solved by curtailing the vehicle population growth, through VQS. Recently there has been some dis-satisfied feeling from the commuters regarding the public transport. With increasing population of the city, it is extremely important that public transport and vehicle supply on the road are working efficiently, both being important pillars of the Singapore transportation system. Although Singapore has achieved notable success in land transport by applying several efficient and effective measures, challenges are still ahead toward a sustainable transport environment.


  1. Very nice piece. If you could include the footnote numbers as citations in the text, that would be helpful.

    Interesting that Singapore decided to limit both the number and use of cars. Why do you think they decided on the dual approach? Is there more political pressure against raising the congestion charge ("Everday Rob People")?

    1. Singapore is ranked as the top country in making an ease for business's to grew and the 2nd in protecting investors ( 2012) as it push to maintain and to rise the economical growth and encourage investors to move their investment their.
      It limited size and resources play's an important rule to strict owning a car by both people who are getting wealthier and investors, who are going to own a car in spite of the price.
      so as they they continue to put more tax's or limiting the certificate of entailment's, it developed other Transportation mode's for the people to consider such as Trains, Taxis and Bus's where some of theme have VIP service's to encourage people to depend more on them.
      People have to understand eventually that its for the better tomorrow for Singapore through the present circumstances Singapore is living in my opinion.
      and thanks for your notice Joe


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