All Singapore-registered vehicles will be required to be fitted with an on-board unit (OBU) from January 1, 2027, when the Republic fully transitions to its next-generation Electronic Road Pricing (ERP) system, Acting Transport Minister Jeffrey Siow said on Tuesday, February 3.
Speaking during the debate on the Land Transport and Related Matters Bill in Parliament, Siow said the move is necessary as the new ERP 2 system relies on satellite technology to determine a vehicle’s location for toll charging, instead of physical gantries used under the current ERP framework.
About 930,000 vehicles, or 93% of the vehicle population, have already been equipped with an OBU, according to the Land Transport Authority (LTA). The authority said it is on track to complete the islandwide installation exercise in 2026.
Vehicle owners who have yet to install the unit will receive a final reminder from February 15, 2026, and will be given three months to do so at no cost. After this grace period, installation fees will apply — S$35 for motorcycles and S$70 for other vehicles.
Siow said ERP 2 will allow for more precise congestion management compared with the existing system, which currently comprises 95 gantries, of which 22 are operational. With satellite-based charging, new toll points can be introduced without the need for large physical structures. Charges can also be spread across multiple locations instead of being concentrated at a single point, which he said would be fairer for motorists.
He assured drivers that new charging points would be introduced only when necessary, targeting areas with persistent congestion. While the technology enables distance-based charging, Siow said this would not be implemented in the immediate term. The government will continue studying the approach after motorists become more accustomed to the new system and conditions stabilise.
Certain vehicles will be exempted from the OBU requirement, including construction equipment such as tractors and vehicles under the Restricted Use Scheme, like those operating in airports and ports.
Classic and vintage vehicles are also exempt, although owners may opt to install a free OBU if it is technically feasible. From January 1, 2027, classic or vintage vehicles without an OBU will instead pay a flat daily ERP fee — S$3 for motorcycles and S$10 for other vehicles — on days when ERP is in operation.
Foreign-registered vehicles may choose to install an OBU, but those that do not will be subject to a daily flat-rate ERP charge. Malaysian taxis, however, will be required to install an OBU to facilitate tracking and enforcement within Singapore.
The bill also introduces tighter controls over OBU-related services, mandating that installation, modification, repair and repositioning be carried out only by authorised technicians.
Unauthorised work or tampering could attract fines of up to S$20,000, jail terms of up to 12 months, or both. In addition, missed ERP payments will be decriminalised and treated as an administrative matter.
Vehicle owners who fail to settle outstanding charges within five days of receiving an LTA notification will be barred from selected services, such as renewing road tax or transferring vehicle ownership, until payment is made along with a S$10 administrative fee.
Siow also highlighted rising concerns over illegal vehicle modifications and the use of unregistered or deregistered vehicles. More than 1,000 illegal modification cases are detected annually, prompting proposed increases in penalties. Individuals convicted could face fines of up to S$20,000 and up to two years’ jail, while workshops could be fined up to S$40,000 for a first offence and S$80,000 for repeat offences.
Penalties for using unregistered or deregistered vehicles will also be significantly raised, amid a sharp increase in cases from 75 in 2024 to 245 in 2025.
Siow said such vehicles are often linked to criminal activity and pose serious safety risks as they lack insurance and regular inspections.
Members of Parliament raised concerns during the debate, including the potential impact of future distance-based charging on workers who rely on their vehicles for a living, as well as data protection and privacy issues linked to location tracking. Others questioned whether the new system could be leveraged to detect illegal vehicles more effectively.
The bill also proposes stiffer penalties related to speed limiters on lorries, an issue addressed by Senior Minister of State for Home Affairs Sim Ann. She said enforcement would be strengthened by extending liability beyond drivers to include owners and others who knowingly allow non-compliant vehicles to be used, with higher penalties to better reflect the risks posed by speeding heavy vehicles.
The proposed legislative changes aim to support a smoother transition to ERP 2, enhance road safety and strengthen enforcement as Singapore modernises its land transport framework.
