The Land Transport Authority (LTA) recently announced that it has awarded a tender to develop the next-generation Electronic Road Pricing (ERP) system. Chalking up another first in the world aside, how will it affect you as a motorist when the system is in place by 2020?

1) Satellite-based system 

The basics: the next-generation ERP system will be powered by a satellite system and is able to charge road usage based on distance travelled. It will replace the current system which consists of gantries located at selected peak traffic areas.

The first implications of this change is the upgrading of your current ERP In-vehicle Unit (IU). This new unit will be a ‘smart’ unit, which not only displays the road charges but also provides more information such as traffic advice and alternative route options, and possibly – parking lot availability and car park charges.

LTA will give motorists an 18-month period to upgrade their cars to the new system once it is in place by 2020. Carparks that currently use the Electronic Parking System (EPS) to charge motorists via the IU will also have to upgrade their systems in order to be compatible with ERP 2.0.

2) Fairer road charges?

Of course, the key aspect of ERP 2.0 is the progression towards a more flexible road pricing system. Moving to a satellite-based system with island wide coverage means that the system may adjust ERP charges based on real-time traffic conditions. With real time traffic data, the system could alleviate congestion on our island in future.

Looking ahead, a distance-based charging policy may be good news to the occasional driver, who clocks shorter distances than the frequent driver, hence paying less. LTA has not indicated a confirmed timeline as to when the policy would be in place for this distance-based charging system, but it is definitely something that will be looked at as ERP 2.0 goes online. Expect discussions to be held between the relevant stakeholders, as well as those who will be most affected by distance-based charging, such as taxi drivers and goods deliverymen, in order to find the fairest and most equitable system for all.

3) Broader usage of telematics

Telematics is the science of using technological devices to transmit information over distances, and the most common usage of telematics in automobiles is via the satellite-navigation system that many people now use to help them with directions to places. Other automotive-related usage includes car alarm tracking systems, which can pinpoint and even shut down a stolen vehicle if required. Currently, some cars also come with SOS systems that can send out alerts for assistance if a car was involved in an accident.

With the implementation of the satellite-based ERP 2.0, there is a likelihood for the increased relevance for automotive telematics. Theoretically, as every car can in Singapore can now be tracked, there could be a broader use for ERP 2.0 other than just road charging. Parking charges, traffic offences, and off-peak road usage can all be monitored and enforced through the system. In an ideal world, this would result in a fuss-free motoring experience for drivers.

Going further, telematics can also be used to resolve disputes in the event of traffic incidents, as they are able to capture information for each individual car, such as location and travelling speed. In insurance terms, this may lower possibilities of disagreements, as key facts will be available to determine liability when it comes to traffic incidents. Indeed, some insurance companies are already utilising telematics by requesting motorists to track their driving data using a device, and in return rewarding them with reduced premiums if they are shown to have good driving habits.


As LTA has yet to finalise full details of the new ERP 2.0 system, questions of privacy for motorists remain, although LTA has mentioned that the system will only retrieve relevant information required for the system to be operational.

In the meantime, while we wait for telematics to become a nationawide technology and ERP 2.0 to go live, you still need a car insurance plan to drive legally in Singapore - that remains unchanged. Thinking of renewing your car insurance? Check out GoBear's comparison options