The decision by the Malaysian Government to impose levy on foreign vehicles entering the country via Causeway or Second Link Checkpoints in Johor Baharu is seen as a wise move. Whilst the levy will add revenue directly to the country, the move is to counter balance the recent hike in the equivalent levy for foreign vehicles entering the city-state and island country, also known as Vehicle Entry Pass (“VEP”). For the longest time, Malaysian Government had never imposed such VEP charge to Singaporean motorists that enter Malaysia, a long term measure taken by the Government to attract Singaporean to do their shopping or any other businesses in Malaysia particularly Johor Baharu. It is only fair for the Malaysian Government to start introducing similar VEP to motorists from Singapore. With higher purchasing power due to stronger Singapore Dollar currency, it is believed that the VEP Malaysian version would not hinder Singaporean to come to Johor Baharu to do their weekly groceries shopping and refuel their vehicles over the weekend. After all, the VEP is not chargeable to all motorists during weekend.
On 1 August 2014, the Singapore Land Transport Authority (“LTA”) increased its VEP rates from S$20 to S$35 and from S$10 to S$40 for private and commercial vehicles respectively. According to LTA, the move is to curb the number of foreign vehicles entering Singapore due to rising number of vehicles on the road.
The VEP hike has sparked a lot of public outcries amongst Malaysian who travel in and out of the City State Island to go to work daily. In response to that move, under the recommendation by the Johor State Government, the Federal Government has decided to start collecting toll charges to all vehicles passing Eastern Dispersal Link Expressway (“EDL”) and crossing the Bangunan Sultan Iskandar Customs, Immigration and Quarantine (“CIQ”) Complex inbound and outbound effective from 1 August 2014, a move that is seen to recover compensation cost paid by the Government to the concessionaire, Malaysian Resources Corp Bhd (“MRCB”) and upgrade the highway. In 2013, the Government paid RM587 million to compensate for tolls. The Government can now save the same costs and reduce its rising debts as part of fiscal policy.
Singapore LTA had introduced 3 types of charges levied to foreign registered vehicles entering the City State Island many years back, i.e. Toll, Vehicle Entry Pass (“VEP”) and Electronic Road Pricing (“ERP”). Toll charges are imposed for the main gateway to Singapore, i.e. Causeway and Second Link. Toll rates are charged differently at each location and according to type of vehicles, i.e. commercial or private. VEP fee is a daily charge imposed for foreign vehicles that enter Singapore for keep or use. ERP is used in managing road congestion in Singapore and is charged at flat rate to foreign vehicles when they use any priced roads during peak hours.
The Singapore LTA has announced in September 2014 that the toll charges at Woodlands Checkpoint will be raised for foreign vehicles (except motorcycles) mainly from Malaysia inbound and outbound, effective from 1 October 2014. Currently, toll is only imposed on motorists leaving Singapore.
Although the increase is unjustifiable and uncalled for in the wake of its VEP hike, it is a blessing in disguise for Malaysian as those who work in Singapore must now start to rethink their job position as the rising travelling costs vis-a-vis VEP and toll charges may dampen their future take home pay.
The Johor State Government must seize this opportunity to attract more investors and create more job employment opportunities for Johoreans who are returning from Singapore job market, particularly in Iskandar Development, Region.
Singapore Government relies heavily on foreign workers to boost its economy as its population is shrinking due to rising cost of living causing birth rate to decline over the years.
Certified Public Accountant
Arus Baru Economic research & studies team