Questioning the prudence: Singapore’s potential S$155 million expenditure on its ‘new’ outmoded ERP system

The initiation of Singapore’s Electonic Road Pricing (ERP) 2.0 rollout and the accompanying onboard units (OBUs) has stirred a significant debate, primarily focusing on its apparent redundancy, given the prevalence of advanced miniature telecom devices today.

The system, intended to replace the existing gantry-based ERP structure in place since 1998, was initially lauded when former Transport Minister Lui Tuck Yew introduced it in 2013.

The satellite-based ERP was heralded as innovative, offering features like couponless street parking and dynamic charging for off-peak cars. However, the road from these initial promises to actual implementation has been bumpy and extended.

With the tender for this “novel” system being awarded to NCS and MHI Engine System at a staggering S$556 million in 2016, expectations were high.

Yet, the project, which was to be operational by 2020, encountered setbacks, pushing its launch to the latter half of 2023. These delays were primarily due to the global microchip shortage, further strained by the COVID-19 pandemic’s complications.

In an age where technology evolves rapidly, the government’s insistence on deploying what many now view as an obsolete system has raised eyebrows and sparked intense criticism.

Commentators like Alfred Siew from Techgoondu.com point out the glaring redundancy of the ERP 2.0 system.

Modern vehicles are already equipped with sophisticated technology, and the ever-present smartphones possess more than sufficient capabilities to undertake the functions planned for the new OBUs.

The question, then, is why the government persists with an investment in a system that appears regressive.

Current tech solutions, including apps like Google Maps, are not only efficient in traffic management and real-time updates but also continue to improve through frequent enhancements and user inputs.

For most observers, the functionalities offered by the OBUs, particularly toll payment, seem unnecessarily simplistic and outdated.

This planned obsolescence becomes even more contentious when we consider the fiscal implications as LTA has announced that all eligible Singapore-registered vehicles, except those approaching mandatory deregistration, will receive their OBUs free of charge.

According to LTA’s data, with nearly a million vehicles (995,746 to be precise) on Singapore’s roads as of 2022, the cost of implementing such a system is no small figure.

Installation of the new IUs is estimated at approximately S$155,140,236.80— S$155.80 per unit, assuming the costs remain consistent with current rates.

This substantial expense, not including its operating costs and maintenance, comes at a time when global economies, including Singapore, are recovering from the pandemic’s blows.

Many argue that these funds could be better allocated to more immediate concerns such as healthcare, job creation, and economic revitalization.

Additionally, the extended development period of ERP 2.0, spanning more than a decade, illustrates the risks of technological investments that do not match the speed of innovation.

The satellite-based system, once considered state-of-the-art in 2013, now faces criticism for its outdatedness, challenging the government’s foresight and flexibility in committing to long-term projects.

Continuing with the ERP 2.0 system seems anchored more in salvaging sunk costs rather than pragmatism or public interest.

This adherence to a sunk cost fallacy neglects a holistic consideration of costs and benefits, favouring historical investments over current realities and future trajectories.

Indeed, stopping the project now would demand a rigorous justification for the abandonment of significant financial resources.

It’s more difficult for ministers to justify writing off the project as a loss than it is for them to concoct justifications for its continuation, maintaining that the unit is still functional, albeit expensive and unnecessary.

This situation echoes the scenario surrounding the beloved Kallang Stadium, which was replaced by a more expensive national stadium.

Due to impracticalities, the National Day celebration was conducted only once for the 2016 National Day Parade in the new Sports Hub, which cost S$1.87 billion to build.

Subsequently, ministers have rationalized the new stadium’s existence in Parliament by highlighting its contributions to advancing sports in Singapore—a point that remains contestable.

Beyond the financial sinkhole, the commitment to an outmoded ERP 2.0 system presents a rigidity that could hamstring Singapore’s response to future needs and innovations.

The COVID-19 crisis exemplified the nation’s agility in leveraging mobile technology for rapid policy implementations, as seen in the deployment of contact tracing and quarantine apps.

These nimble responses were possible because of the population’s readiness to adopt changes and the flexibility offered by app-based solutions.

Locking the toll system into a fixed, hardware-dependent format, as with the OBUs, limits such adaptability. Any necessary system modifications would likely be slow and costly, contrasting starkly with the fluidity of app updates.

This inflexibility affects not just financial resources but also Singapore’s capacity to stay ahead in technological advancements, potentially pushing the nation’s infrastructure to the sidelines of innovation.

It’s worth noting that, even with an app-based ERP system—which may entail lower maintenance and operational costs—the government still maintains the capability to impose charges as it has in the past.

While LTA assures a gradual transition from the old system, marked by the retention of ERP gantries during the initial period, there’s an evident lack of clarity on significant future strategies, such as distance-based pricing.

The hesitancy to disclose these plans could be interpreted as a strategic move to defer potentially unpopular announcements until after crucial political milestones, such as the next General Election.

Furthermore, the government’s firm stance on a state-controlled apparatus within private vehicles raises concerns about privacy and personal autonomy.

In today’s climate of heightened data privacy awareness, the introduction of a mandatory device with unclear functionalities sparks legitimate apprehensions. Although a developer kit is available, it offers no guarantee of disclosing all the device’s built-in features.

The government’s need for control must be balanced with transparent communication about these devices’ operations and data privacy safeguards.

The assurances from LTA regarding privacy protection are not convincing, especially considering the public’s memory of the TraceTogether token saga.

The controversy surrounding ERP 2.0 is a multifaceted issue that encapsulates the challenges of technological advancements, fiscal responsibility, and the delicate balance between governance and individual privacy.

It serves as a potent reminder of the need for more adaptable, transparent, and publicly inclusive decision-making in governmental projects, particularly those involving technology’s ever-changing landscape.