Rethinking road pricing

When Electronic Road Pricing (ERP) was first introduced in Singapore in 1998, the naive journalist that I was believed it would be a suitable intervention for Metro Manila. Congestion in high-traffic areas could be minimized if motorists were made to pay to use certain streets during specific hours.

ERP essentially turned Singapore’s regular roads into tollways, with pricing determined by congestion and time of use, rather than distance traveled. Fees were higher during peak hours. The system used gantries equipped with sensors at entry and exit points and automatically collected fees via in-vehicle units.

ERP is similar to the electronic toll collection system we have locally — except that in ERP, fees are charged for using public roads during peak hours. If applied to EDSA, for example, motorists would pay a fee for using the road during high-traffic times. Outside these hours, EDSA would remain toll-free.

For the sake of discussion, let’s use a base fee of P100 for all motorists using EDSA between 6-9 a.m. and 5-9 p.m. If traffic volume spikes by 7 a.m., the fee could increase to P200 to P300. During pricing hours, fees would be dynamic — rising or falling depending on traffic levels.

The idea is to discourage motorists from using EDSA during rush hour and to encourage them to take alternative routes. The goal is to decongest EDSA, which is the main artery for public transport and commuters using the train system. By setting different rates for private vehicles and public utility vehicles, ERP can also benefit public transportation.

To an extent, I believed ERP was a logical solution for EDSA. After all, it has worked well in Singapore (since 1998) and London (since 2003). Singapore is now transitioning to a next-generation, satellite-based ERP system that uses GPS to charge motorists more precisely, rather than relying solely on gantry sensors, as we do with our current tollways.

Singapore’s ERP system features dynamic pricing that varies by time, location, and traffic volume. It is fully automated, with no toll booths or barriers. Enforcement is seamless. Fees are reviewed regularly and adjusted based on real-time congestion data.

Available information indicates that ERP in Singapore led to a 30% reduction in traffic volumes in congested areas. Peak-hour travel speeds in the city center improved from 20 km/h to 30 km/h. Air quality improved due to fewer idling vehicles, and public transport usage increased. ERP fees also help fund public transport infrastructure and road maintenance.

In London, the congestion charge system has been in place since 2003. It uses a flat-rate model: the equivalent of about P1,100 per day per vehicle entering central London between 7 a.m. and 6 p.m. on weekdays. Cameras and license plate recognition systems monitor entry points. Emergency vehicles, taxis, electric vehicles, and persons with disabilities enjoy exemptions or reduced rates.

London has reportedly seen a 15% to 20% drop in traffic volumes within the charging zone, reduced congestion delays, improved air quality, and a rise in cycling and walking — especially after the addition of bike lanes and pedestrian zones. Most of the collected fees are reinvested in London’s transport system.

Stockholm (since 2006) and Milan (since 2012) have also implemented time-of-use pricing on city roads. Stockholm uses time-based pricing, while Milan combines time- and pollution-based pricing. Both cities have reported improvements in traffic flow and public health outcomes.

In January, New York City began charging drivers a $9 fee to enter Manhattan below 60th Street during peak hours, with reduced rates at other times. Early data shows a 13% drop in vehicle entries, shorter travel times, more people using public transit, and increased pedestrian activity. In just three months, the program collected around $160 million earmarked for transit upgrades.

However, in March, the US federal government revoked its prior approval of the NYC program, claiming it imposed financial hardship on working-class commuters. The programs also lacked toll-free alternatives for the public. The Metropolitan Transportation Authority (MTA) sued to challenge the decision, and the case is now pending in court.

I consider ERP a form of usage-based taxation. It taxes motorists for using a specific road at a specific time. This “usage tax” is conceptually similar to the excise taxes that Filipinos pay on gasoline, cars, jewelry, tobacco, and alcohol. The revenue collected can be earmarked for public transport infrastructure and road upkeep.

In Singapore and London and Stockholm, driver education is arguably more advanced than in the Philippines. Public infrastructure is better. Their mass transit systems — trains, subways, buses — are far more efficient. These cities have shown that congestion pricing works because of three things: effective public transport, transparent use of funds, and well-informed drivers and commuters.

More importantly, road pricing in these places perhaps does not significantly impact the cost of living. Here, the typical argument is: “We already paid taxes to build the roads — why pay again to use them?” An ERP here would add to the existing burden of taxes and fees already imposed on car owners.

Moreover, I reckon cities like Singapore, London, and Stockholm do better than us at planning and implementation. Their systems are relatively reliable. Their citizens are more accustomed to following rules. And they are ahead of us in fighting corruption. Most importantly, they have efficient, reliable, and comfortable public transport systems.

These, I believe, are the essential ingredients that made ERP a “success” in Singapore, London, Stockholm, Milan, and New York. That said, I understand the criticism that ERP could be financially burdensome for the working class, especially if toll-free alternatives aren’t available.

In EDSA’s case, I suspect congestion pricing would simply divert traffic to other roads, without significantly decongesting EDSA itself. Worse, the additional costs from ERP could be passed on to commuters as higher fares (except for trains) and higher vehicle operating costs.

Clearly, our public transport system still has major gaps. Only when we have efficient, affordable, and comfortable light rail and bus rapid transit options — especially on EDSA — will people willingly leave their cars at home. That’s when road pricing can genuinely work, with or without ERP.

For policymakers considering ERP for EDSA or other major Metro Manila roads, this effort must be part of a broader traffic management plan. ERP cannot be a one-off fix. It must complement plans to upgrade public transportation, modernize roads, automate traffic management, and reform vehicle taxes and registration policies.

Without these supporting elements, ERP will simply become another burden — an additional cost for private motorists and public utility vehicle operators. Worse, it may not solve congestion at all but merely redistribute it to surrounding streets.

The government cannot keep building more roads. Land is finite, and only so much can be allocated to road infrastructure. Vehicle ownership will continue to rise. Road pricing is only effective if implemented alongside a comprehensive suite of solutions to manage traffic and transportation demand.

An efficient, comfortable, and cost-effective mass transit system remains the most viable solution to congestion. Without it, road pricing cannot be implemented fairly — or effectively. It shouldn’t be considered at all. Leave the fees to the tollways.

Source: Business World

How Infrastructure is Transforming Housing Choices in the Philippines

The way Filipinos choose where to live is evolving, and infrastructure development is driving this transformation. With PHP 1.54 trillion allocated to major projects in 2024 alone, the country is seeing significant improvements in roads, transport systems, and interregional connectivity. These developments are expanding housing options beyond Metro Manila, creating new residential hubs and investment opportunities in emerging cities.

The Shift from Congestion to Connectivity

For decades, homebuyers prioritized properties within Metro Manila’s business districts, where employment opportunities were concentrated. However, this often came at the cost of long commutes and expensive real estate. Now, major expressways, rail systems, and bridges are reshaping how and where people choose to live.

The completion of projects like the North-South Commuter Railway, Cavite-Laguna Expressway (CALAX), and Metro Manila Subway is reducing travel times and making suburban living more convenient and attractive. As a result, Bulacan, Pampanga, Laguna, Cavite, and Batangas are experiencing a surge in demand from homebuyers looking for better accessibility and more affordable housing options.

The Impact of Metro Manila’s Traffic on Housing Preferences

Metro Manila’s traffic congestion remains a major challenge, ranking 27th globally in congestion levels and 14th in travel time according to the 2024 TomTom Traffic Index. Commuters lose an estimated 127 hours per year during rush hour, with an average travel time of over 32 minutes per 10 kilometers.

With this reality, many Filipinos are reconsidering their housing choices. Rather than endure daily traffic, more buyers are exploring homes in well-connected suburban cities where new transport projects are cutting travel times while offering a higher quality of life.

The Rise of Township Living

As connectivity improves, real estate developers are expanding master-planned communities and townships, integrating residential, commercial, and office spaces within a single location. Today, there are over 120 townships covering 134,000 hectares nationwide, offering residents the convenience of living near workplaces, retail hubs, and entertainment centers.

These townships cater to the changing preferences of homebuyers, who now prioritize walkability, sustainability, and smart living features. With work-from-home and hybrid work arrangements becoming the norm, these communities provide flexible and modern housing options that align with today’s lifestyles.

Affordability Challenges and Investment Opportunities

While infrastructure expansion is unlocking new residential markets, the rising cost of land, construction, and financing presents affordability challenges. However, developers and financial institutions are introducing creative payment terms, lower down payments, and flexible mortgage options to make homeownership more accessible.

For investors and homebuyers, emerging locations present strong opportunities. Properties in areas with ongoing transport projects are expected to appreciate significantly in the coming years, making them ideal for long-term investments. These areas not only offer more affordable real estate compared to Metro Manila, but also provide larger living spaces, modern amenities, and less congestion—key factors for those seeking a higher quality of life.

Looking Ahead: The Future of Housing in an Infrastructure-Driven Market

With continuous improvements in road networks, rail systems, and airport expansions, the Philippine real estate market is set for sustained growth. Homeownership is no longer limited to Metro Manila’s urban core—buyers now have greater location flexibility and more diverse housing choices.

For those planning to invest, understanding how infrastructure impacts property values is key. Areas that are currently more affordable but have upcoming transport projects will likely see strong price appreciation. Making strategic housing decisions early can lead to better returns and an improved living experience.

As the country continues to expand its infrastructure, real estate investment is becoming more dynamic than ever. The future of housing lies in accessibility, well-planned communities, and seamless mobility, where Filipinos can live, work, and thrive in a fully connected nation.

Source: Leechiu

Financial sustainability of mass transit

One of the large challenges on the horizon is how existing and future mass transit in the Philippines can remain financially viable so that services can be placed on a stable footing, and adequate operation and maintenance will be applied. This is of significant concern, especially because there are several major mass transit projects coming on stream over the medium term. The Metro Rail Transit Line 7 (MRT 7) is expected to be operational in the next one to two years. By 2032, the Metro Manila Subway and the North-South Commuter Railway are also expected to be online.

Financial sustainability of public transport operations is a natural challenge for any national agency or local government because of the expectation that fares should be kept affordable. There is likely to be constant political pressure to keep public transport fares as low as possible. For this reason, the revenue from railway fares is unlikely to cover the full cost of delivering the service. This implies that a continuing subsidy will be required so that operations do not suffer even if fare revenues fall below expenditures over a prolonged period.

If a continuing subsidy is required, the subsidy should not be dependent on the annual budget appropriated by Congress, as this could become unreliable and subject to political whim. There is therefore a need to find stable and reliable non-fare revenue sources and to earmark these for mass transit (in the same way that 'sin taxes' on alcohol and tobacco are channeled into funding vital and continuing health services). There are three substantial sources of revenue that can help to fund the possible financial deficits of mass transit operations: parking levies; congestion charging/congestion pricing; and traffic violation fines.

Parking levies: Free or very low-cost nonresidential parking spaces in urban centers are "magnets" for traffic; they attract increased motor vehicle use. In busy urban centers, there is a need to manage the demand for parking spaces as well as to compensate the rest of society for the added road congestion due to the availability of these spaces. There is ample justification for introducing a daily levy or tax on each nonresidential parking space in a crowded urban area, to be collected whether or not the parking space is used.

In Greater Manila, where there are over a million nonresidential parking spaces available, the revenue potential from a parking levy is considerable. A million nonresidential parking spaces, each subject to a daily levy of P100 would generate P100 million per day, enough to subsidize several million public transport trips daily.

Congestion pricing, whereby vehicles are charged a fee (collected like a toll) for entering the center of a city or a busy corridor or district, can help to reduce the demand for private vehicle use while providing a revenue stream that can support public transport development and operations.

The experience of New York City is instructive. In an article (found in www.curbed.com) titled "How Well Is Congestion Pricing Doing? Very," these were the highlights for the first 100 days of congestion pricing: complaints about car honking dropped 70 percent; rush-hour delays at the Holland Tunnel dropped 65 percent and travel time through it fell 48 percent; the number of cars entering Lower Manhattan fell by 6 million compared to a year earlier; traffic-related injuries in the congestion zone dropped by half; Metro-North ridership rose by 8 percent; and visitor counts in business improvement districts increased by 1.5 million year over year.

Clearly, congestion pricing offers an effective mechanism for curbing the demand for use of motor vehicles while providing a steady revenue stream that can support mass transit operations.

Fines and penalties for traffic violations are another rich source of additional revenue that could help keep public transport financially viable while maintaining affordable fares. The key is to bring back the camera-based no-contact apprehension system and fix any remaining legal and technical constraints. Cameras at every busy intersection or street corner will pay for themselves many times over, while altering driver behavior for the better. This mechanism will provide another meaningful stream of funds to support reliable and adequate public transport while keeping driver behavior in check.

Just as important as setting up the infrastructure for modern mass transit schemes is the establishment of funding mechanisms to ensure that public transportation will not be a burden on the national budget. This means, early on, putting in place the additional sources of revenue — parking levies, congestion pricing and fines from traffic violations — that will provide a steady, predictable stream of funding to cover the likely operating deficit.

Source: Manila Times