In his recent working paper titled "Electronic Toll Collection (ETC) Deployment on Highways: Global Patterns, Estimated Gains from the Case of Vietnam, and Policy Discussion," Associate Professor Vu Minh Khuong explores the shift towards ETC systems on highways, examining global patterns and the specific case of Vietnam. The study highlights the significant benefits of ETC, such as reduced emissions, efficiency improvements, and significant cost savings, and discusses policy insights that can guide similar transitions in other developing countries.
His research paper provides insights into the global patterns of ETC adoption, the potential gains of ETC deployment, Vietnam's efforts to implement ETC, and the estimation of tangible benefits from this deployment. The study also discusses policy lessons and concludes with a survey of driver perceptions regarding the MTC-to-ETC transition.
Global Patterns and Technological Trends in ETC Deployment
The transition from MTC to ETC has been a global phenomenon driven by the need for efficiency, cost savings, and environmental sustainability. Over the past three decades, ETC systems have gained traction globally, becoming a critical infrastructure component in both developed and developing nations. The global ETC market, valued at US$9.2 billion in 2023, is projected to grow at a compound annual growth rate (CAGR) of 8.1%, reaching US$14.7 billion by 2029. Notably, 90% of this market is dedicated to highway applications, underscoring the importance of toll infrastructure in facilitating economic prosperity and societal well-being.
Prominent ETC technologies include Radio Frequency Identification (RFID) and Dedicated Short-Range Communications (DSRC). Among these, RFID technology dominates the market due to its cost-effectiveness and ease of deployment. In contrast, DSRC’s market share is decreasing, indicating a transition towards more efficient and scalable technologies. Notably, emerging ETC technologies such as automatic number/licence plate recognition (ANPR/ALPR) are gaining traction, further diversifying the market landscape.
The case studies of China and India demonstrate the strategic importance of highway development and tolling policies for economic prosperity. Both countries have made substantial investments in highway infrastructure and have embraced ETC to varying degrees. China has seen significant benefits from ETC, such as reduced transaction times and emissions, while India has adopted an ecosystem approach to ETC deployment, involving multiple stakeholders and experiencing rapid growth in ETC transactions.
Vietnam’s Transition from MTC to ETC
Vietnam’s complete transition to ETC by 2023 serves as an exemplary model for other developing countries. The initial shift from MTC to ETC was driven by the need to address severe traffic congestion at toll plazas and to leverage the rapid advancements in digital technology. The transition began in 2014, with the Ministry of Transport (MOT) establishing a task force to explore suitable ETC technologies. Following extensive deliberation and pilot implementations, passive RFID technology emerged as the preferred solution due to its low adoption cost and potential for rapid penetration.
By August 2022, Vietnam mandated the universal deployment of ETC across its highway network. The immediate impact was substantial, with notable reductions in gasoline and diesel consumption (60,816 tons), CO2-equivalent emissions (192 tons), and vehicle wait times. In monetary terms, the total cost savings in 2023 alone amounted to US$442 million. Projections for 2024-2030 indicate further reductions of 597,862 tonnes of fuel and 1.886 million tonnes of CO2 emissions, with total savings reaching US$4.352 billion.
The success of Vietnam's ETC deployment can be attributed to several factors. The government played a crucial role in coordinating efforts and setting ambitious targets for highway expansion. Private sector engagement was also pivotal, as businesses recognised the cost-effectiveness and profitability of ETC systems. The rapid advancement of digital technologies further facilitated the transition, making ETC a feasible and attractive option for highway toll collection.
Benefits of ETC Systems
The deployment of ETC systems offers multifaceted benefits:
1. Efficiency and Environmental Gains: ETC significantly reduces vehicle wait times at toll gates, leading to decreased fuel consumption and lower emissions. In Vietnam, the transition to ETC resulted in a 33.3-second reduction in transaction times and notable gains in fuel efficiency.
2. Economic Impact: ETC enhances toll collection efficiency, reducing operational costs and the need for additional toll booths and lanes. For toll agencies, this translates to significant savings in both infrastructure and labour costs.
3. Data Utilisation: The data generated by ETC systems provides valuable insights for traffic management and economic analysis, enabling better urban planning and infrastructure development.
4. Projected Growth: Projections for the period from 2024 to 2030 indicate that the ETC transaction volume in Vietnam will grow at a CAGR between 6.0% (low-case) and 11% (high-case), with a midpoint at 8.5%. This growth is driven by the expansion of toll highway networks, an increase in the vehicle population, and Vietnam’s GDP growth.
Future Outlook and Policy Recommendations
ETC systems are crucial for modernizing highway infrastructure and achieving broader digital transformation goals. To maximise the benefits of ETC, it is recommended that developing countries:
1. Mandate Universal ETC Adoption: Governmental mandates are essential to ensure compliance and overcome resistance from existing toll operators.
2. Promote Public-Private Partnerships: Engaging with private sector players can bring in additional expertise and capital, accelerating the deployment process.
3. Leverage Data for Improved Traffic Management: The rich data generated by ETC systems should be utilised to enhance traffic management and urban planning efforts.
4. Invest in Complementary Digital Solutions: ETC should be part of a broader digital strategy that includes payments for parking, fuel, and other services to create a seamless urban mobility experience.
Conclusion
The transition to ETC systems marks a significant advancement in highway management, offering substantial environmental, economic, and efficiency gains. Policymakers must foster supportive regulatory environments, engage stakeholders, and leverage digital technologies to realise the full potential of ETC systems, ultimately creating more efficient, sustainable, and modern transportation networks. The lessons learned from Vietnam's experience can guide other developing countries in their own transitions to ETC, fostering a global movement towards smarter, greener transportation systems.
Vu Minh Khuong is an Associate Professor at the Lee Kuan Yew School of Public Policy (National University of Singapore). His research and teaching concentrate on economic development and policy analysis.