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VEP - Does Malaysia fully understand why Singapore charges VEP?

Investor

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VEP - Does Malaysia fully understand why Singapore charges VEP?

Statistics from LTA showed that the total population of Singapore in 2013 was 5.399mil (Source: LTA Singapore). Out of 5.399mil, 3.845mil are Residents(Citizens and PRs), the other 1.554mil are Non-Residents(Work Permit holders, Employment Pass holders, S-Pass holders etc). In the same year, the total number of cars(all types) excluding motorcycles is 829,236 (Source: LTA Singapore)

Cars in Singapore are very expensive, the cheapest new car you can get presently is easily more than SGD90k(roughly around RM240k), thanks to the super high import tax of motor vehicles and the piece of ultra expensive 'paper'. To add salt to your wound, you can only drive it for 10 years. In Malaysia, we can get a brand new car at only RM25k, moreover, it doesn't 'expire' in 10 years. Nobody in Singapore will buy a car in Singapore if they are allowed to buy their car in Malaysia and drive it in Singapore. That's why the government of Sg came out with a law which forbids residents of Singapore(Citizens and PRs) from driving a Malaysian registered car in Singapore.

What about Non-Residents of Singapore(Work Permit holders etc as stated above)? Sg cannot just ban these Non-Residents from driving a Malaysia registered car into Sg. But without any control, all those 1.554mil Non-Residents of Singapore who work in Sg will definitely be driving their affordable Malaysia registered cars in Sg(for those who reside in Sg) or driving daily into Sg(for those who reside in Johor and do the daily commute into Sg for work). Now, Sg is a very small island and the government controls the total number of vehicles in this tiny island very tightly. With just 829,236 vehicles in Sg(excluding motorcycles), we are already stuck in traffics jams everyday even during non-peak hours nowadays! If half of those 1.554mil Non-Residents who work in Sg drive their Malaysia registered cars in Sg, it will take us 5 hours just to get from Woodlands East to Woodlands West. Thus, the government of Sg has to solve this problem, and they came up with the idea of charging DAILY VEP in order to make it financially not feasible to drive a Malaysia registered car in Sg daily. Thus, the government can have more control of the car population in Sg.

Many of the low income workers in Sg, who are Malaysians, have cars in Malaysia. With this daily VEP charge, most workers have no choice but to ride a motorcycle into Sg for work everyday. A small number of Non-resident executives who work in Sg, after doing their detailed calculations, still find it cheaper to buy their cars in Malaysia and pay the daily VEP, than to pay $xxx amount for a Sg car. A friend of mine used to do that and drove his Malaysia registered car in Sg everyday. That's why, the bigger the price gap between Sg cars and Malaysia cars, the higher LTA will adjust the daily VEP amount in order to close up the price gap and make it financially not feasible for Non-residents workers of Singapore to drive their Malaysia registered cars in Sg. Sg recently increased the daily VEP amount because of the recent significant increase in prices of our COE. Guess what, my friend stopped driving his Malaysia car in Sg after the VEP fee was increased.

Sg has no choice but to charge VEP but they know full well that any extra charges in this form will surely slow down economic activities, reduce foreign investments from Malaysia, cut down the number of tourists coming into Sg from Malaysia via cars etc. Thus, Sg only charges VEP from Mon - Fri from 2am until 5pm. After 5pm, there will not be any VEP fee. They do not charge VEP on Sat, Sun and public holidays and they give each motorist 10 VEP-FREE days annually. Apart from that, during the Singapore mid-year and year-end school holidays, VEP fees will only apply from 2am – 12pm(instead of 5pm). All these efforts are made to attract more investments and spendings from Malaysians.

The government of Malaysia also knows very well that they should reduce cross-border tolls in order to attract more investments from Sg and to spur economic activities in Iskandar. That was why Malaysia asked Singapore to reduced the 2nd Link tolls together with them some time ago, from a total of around RM50 to around RM35 return trips. But when they saw that Sg increased VEP from $20 to $35, they didn't understand the real reason why Sg did that and some simple minded ones got angry and asked questions like, "Why is it that they can charge us VEP and we cannot charge them? We should just charge them RM100! If we don't charge, it is unfair to us right?". Suddenly, Malaysia has forgotten that reducing cross border cost is the way to attract more investments from Sg. They decided to do the exact opposite - to charge many many times more. They proceeded to increase tolls at Causeway significantly and will start charging RM20 VEP from August.

Malaysia wants residents of Singapore to shift their businesses to Iskandar. Or simply buy a house in Iskandar, live and spend in Iskandar and commute to Sg daily for work. But now, they are discouraging that by charging VEP and increasing toll significantly. How do you encourage someone from Sg to buy a house in Iskandar and commute to Sg daily for work when you charge them VEP everyday they cross border? Monthly instalment for a RM500k-RM600k condo in Medini(special zone not affected by curbs and restrictions) is only around RM2k+ per month but if you commute to Sg 26 days a month, you'll have to pay another RM1430 per month on tolls and VEP and we're not even talking about the long distance travel and the super frustrating daily traffic jams at the CIQ which he/she has to endure. Moreover, such amount is enough for this person to get the smallest condo in Singapore(not HDB). Staying in Sg, he doesn't even need to be stuck at CIQ for hours everyday, and having pulled out all his/her hair by the end of the first year of daily CIQ jams.

This VEP will also make most people from Sg, who travel to Iskandar regularly, to reduce their number of trips to Iskandar. Of course, people will still go, but definitely less frequently. SMEs businessmen, whom IRDA has been trying to attract, might think twice about shifting part of their businesses from Sg to Iskandar as VEP is extra cost which they have to bear for their employees who are needed to travel between Sg and Iskandar offices/factories daily.

If Malaysia fully understands the reason why Sg charges VEP, they will know that they are not doing themselves any good by doing the same. If it really has to be done, I think they should look into it deeply and fine tune it. For e.g. Foreigners who invest in Iskandar(whether starting a business or buying a property) are helping the economy of Iskandar. Maybe the government of Malaysia can consider giving 'VEP-FREE-PASS' to such a foreigner who supports the Iskandar economy in such a way. By doing this, at least you're taking away the factor that discourages/deters investments from Singapore, from those who want to invest in Iskandar.

I'm not working for any government agencies and these are just my personal observation. Do share your opinion about VEP.
 
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winnipegjets

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Sinkees will pay lah ...otherwise, where else can sinkees go that is so easily accessible?

The Mudlanders just have to price it correctly.

Mudlanders are getting smarter ...tapping a new revenue stream, thanks to sinkapore. Now, sinkees will have to pay more for imported stuff from Mudland.
 

PuteriWorld

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To be fair on Iskandar progress, it does not solely rely on the sales of houses or spendings from people who drive S-plated cars into JB.

Just look at the several hundreds of thousands of bikers and bus-MRT commuters who are flocking in and out of JB daily and esp during the weekend. I believe that the revenue of these S-plated spenders only constitutes about 15-20% of the total revenue generated. Don't think there are 300,000 SG cars travelling in and out daily but I believe there are more than 300k bikers + passengers of MRTs and buses entering and leaving via our checkpoints.

The damage will be obvious and the congestion might clear but as I said, the revenues of JB economy does not rely on these SG-plate spends who are the minority.

I had the benefit of visiting up to 5 different sales office in several development last month. Yes the sales are slow BUT steady. Most, if not all the buyers are Malaysians are foreigners who are out to retire. The market situation is more realistic.

Iskandar will be affected to a certain extent. To say that it will flop spectacular is far-fetched.
 

RedsYNWA

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Obviously MY don't want to charge too high, else why set it at only RM20 instead of RM35 or RM50. That said, with the expected corresponding drop in total toll fees, petrol income, and lesser collection of GST from retail businesses, it is quite debatable as to whether the MY govt will see a net gain from the imposition of the fee.

Already the causeway is very quiet on weekdays, and this is more or less, permanent now that a few months have passed. Rm20 will just help to kill off more of the red-plates.
 

PuteriWorld

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Obviously MY don't want to charge too high, else why set it at only RM20 instead of RM35 or RM50. That said, with the expected corresponding drop in total toll fees, petrol income, and lesser collection of GST from retail businesses, it is quite debatable as to whether the MY govt will see a net gain from the imposition of the fee.

Already the causeway is very quiet on weekdays, and this is more or less, permanent now that a few months have passed. Rm20 will just help to kill off more of the red-plates.

Have to agree that Causeway is pretty quiet on weekdays but if one drives around Bukit Indah area, the terrible jam still persist. The crowds are still thronging places like Jusco, Tesco, Puteri Harbour etc
 

ComingToJB

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Is there a need to understand? MY just needs a convenient reason/scapegoat :wink:

... And at the same time, divert the attention so their ppl will tot is S'pore fault again. Is not new.. MY has been using such tactics over & over again, esp. during Dr. M times

Delay of RTS project also tried their luck & said S'pore is at fault.. but in the end lan-lan can't answer when S'pore fired back..
 
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congo9

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... And at the same time, divert the attention so their ppl will tot is S'pore fault again. Is not new.. MY is good in using such tactics over & over again..

Delay of MRT project also said is S'pore fault.. but in the end lan-lan can't answer when S'pore fire back..

If JB is to be fast, efficient and corruption free. That will be the demise of Singapore.

I am so awe and surprised that Malaysian wish that they have a Prime Minister like LKY so desperately. My answer is, LKY will not be able to survive in Malaysia. He will either be murdered, charge into ISA for Sedition or other crime fabricated.


VEP is a blunt tool. I do not know what are the objective they are trying to achieve. I simply cannot understand. They are thinking that since Singaporean or foreigners who are staying in Singapore bought into ISKANDAR. They will be able to collect toll fee direct from the motorist, into their pocket instead in to pte businesses. But with an increase of toll and VEP, each round trip for foreigners or Singaporean will be 20SGD, that is a huge some of money if you are a frequent traveller. People will travel much lesser.

What they should is to half the toll fee and VEP, then businesses will not be seriously affected. Since you have also implemented GST, you should be able to recover more money from these taxes.
 
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RedsYNWA

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If JB is to be fast, efficient and corruption free. That will be the demise of Singapore.

I am so awe and surprised that Malaysian wish that they have a Prime Minister like LKY so desperately. My answer is, LKY will not be able to survive in Malaysia. He will either be murdered, charge into ISA for Sedition or other crime fabricated.

In the global war for talent, SG's overall living standards will still be higher than MY after 50 years, simply because we have the stronger talent pool. RTS, HSR and cheap airfares will ensure that we continue to draw the best talents from MY to work in SG.

But MY will certainly be closing the gap on us in 50 years time. JB and KL will be very well developed, and being closest neighbours, it's in our best interest to ride on their economic wave, rather than to think of it as 'us vs them'. In the future, its about how do we match up in our economic influence vs other thriving Chinese cities such as Shanghai, Shenzhen, Beijing, HK, Taipei.
 

snowbird

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The weak property sentiment now happening in JB is partly contributed by the expensive new road tolls and the announced VEP.
A couple of SPR in my workplace were planning to purchase one of the condos in JB town but forgo the idea upon the implementation of the tolls.
To them, to whole idea is to have a unit near the CIQ so getting home will be a just short drive and will be giving up the rented unit in SG.
But now, having to add in the daily toll charges, there will be no saving and worse, having to brave the daily traffic jam back and forth, it defeat all the purposes.
 

RedsYNWA

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Have to agree that Causeway is pretty quiet on weekdays but if one drives around Bukit Indah area, the terrible jam still persist. The crowds are still thronging places like Jusco, Tesco, Puteri Harbour etc

Do you mean the weekday or weekend crowds? I think the weekday crowd is pretty thin? I find Jusco Bukit Indah, Sutera Mall, Mydin etc are pretty quiet on weekdays.

Jusco Tebrau and City Square are crowded even on weekdays though. Hard to find parking in both areas when I was there a few times on weekdays.
 

RedsYNWA

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The weak property sentiment now happening in JB is partly contributed by the expensive new road tolls and the announced VEP.
A couple of SPR in my workplace were planning to purchase one of the condos in JB town but forgo the idea upon the implementation of the tolls.
To them, to whole idea is to have a unit near the CIQ so getting home will be a just short drive and will be giving up the rented unit in SG.
But now, having to add in the daily toll charges, there will be no saving and worse, having to brave the daily traffic jam back and forth, it defeat all the purposes.

Yes agreed that it made no sense for the lower income EP and SPRs. It will only make more sense for the middle and upper middle class SPRs and Singaporeans, who have an existing SG residential property that they can rent out to monetize.
 

Investor

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Iskandar will be affected to a certain extent.

Exactly. It's common sense - Higher price(in this case - toll and VEP) = Lower demand.

We're not suggesting that IR will fail. Just that Malaysia should be doing things to encourage investment interest, not the opposite.
 

Investor

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Is there a need to understand? MY just needs a convenient reason/scapegoat :wink:

I think you might be right. I just did a Google search and found that LTA did contacted Malaysia to explain why we need to charge VEP. So Malaysia should know it, I thought they didn't understand and just charge because we do.

Looks like they are just using Sg's VEP as an excuse to charge. But like everyone else said - This is simply penny wise, pound foolish! Even one of Malaysia's own prominent figure said the same.
 

Investor

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Already the causeway is very quiet on weekdays, and this is more or less, permanent now that a few months have passed. Rm20 will just help to kill off more of the red-plates.

From my personal experience, I can back you up on the fact that causeway is very quiet on weekdays now as compared to 'before-tolls-increased' era. We go to Nusajaya once in a while(from SG) during weekdays to settle things. Last time, we never dared to go back to SG via Woodlands Causeway because the traffic jam going back to SG was really bad every single night.

After the tolls were increased, we were able to drive straight up to the passport counter at SG side, totally no traffic jam at all. We are here in BI again right now, will go back via Woodlands Causeway later and report the traffic condition when we get home.
 
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IskandarRocks

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I think you might be right. I just did a Google search and found that LTA did contacted Malaysia to explain why we need to charge VEP. So Malaysia should know it, I thought they didn't understand and just charge because we do.

Looks like they are just using Sg's VEP as an excuse to charge. But like everyone else said - This is simply penny wise, pound foolish! Even one of Malaysia's own prominent figure said the same.

I am not expressing my opinion on whether malaysia VEP is right or wrong. As a matter of fact, as Investors (pun not intended) we will all be hurt. So will be the folks who have bought for weekend or even full time stay.

That said, the reality is that cross border policies are often not made based on the other countries' internal matters. It is often based on Reciprocity. Whether malaysia understands or not.

For example - US charges Vietnamese national US$150 for a visa. Vietnam charges US citizens around the same, even though infrastructure costs are significantly less in Vietnam. Countries like Argentina and Chile have recently implemented Reciprocity Fee for US Citizens to match what US charges their citizens.
 

Investor

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The weak property sentiment now happening in JB is partly contributed by the expensive new road tolls and the announced VEP.
A couple of SPR in my workplace were planning to purchase one of the condos in JB town but forgo the idea upon the implementation of the tolls.
To them, to whole idea is to have a unit near the CIQ so getting home will be a just short drive and will be giving up the rented unit in SG.
But now, having to add in the daily toll charges, there will be no saving and worse, having to brave the daily traffic jam back and forth, it defeat all the purposes.

My Malaysian friend(a Sg PR) whom I got to know in a car group in Sg, works in Sg, drives a Sg car but resides in Johor and do the daily commute. After the tolls increased, he sold his property in Johor and shifted to Sg.
 

winnipegjets

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My Malaysian friend(a Sg PR) whom I got to know in a car group in Sg, works in Sg, drives a Sg car but resides in Johor and do the daily commute. After the tolls increased, he sold his property in Johor and shifted to Sg.

If he drives a Malaysian car, then he would have sold his SG property.
Given his financial commitment to sinkapore, the choice was obvious.
 
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