Childcare Anchor Operators

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Childcare Anchor Operators

Postby insider » Thu Mar 07, 2013 5:08 pm

have been trying to write an article about this Strange Policy of the govt.

found an article below which mirrors my thoughts and so can save me some ink.

The below author is generous in estimating a monthly profit of only $14,000. If those centres are run by me, it will be quite easily $20,000 per month per centre with GOOD QUALITY.

That's one of my major unhappiness about the govt.

They say my childcare centres like cheapest in the market mah, but they may NOT be cheap if you were to look at their ACTUAL cost.

They say my HDB flats like cheaper than private ones mah, but they may not NOT be cheap if you were to look at their ACTUAL cost.

They say my hospitals like cheaper than private ones mah, but they may not NOT be cheap if you were to look at their ACTUAL cost.

Getting quite disillusioned and confused by all these subsidies that Singaporeans will be having...

PS: I buy his Fat Cats Theory coz it makes sense...


October 10th, 2012 | Author: Editorial

Last month, NCMP Yee Jenn Jong of The Workers’ Party outlined an alternative proposal for affordable and good quality childcare by involving all existing operators in a contestable public good model for childcare. He argued that the proposal will bring down the cost of childcare for all operators (‘WP’s proposal for transforming the child care sector‘).

The response by Minister of State for MCYS, Mdm Halimah Yacoob was that the median fees of non-profit operators is consistently below industry median. The message we have always been hearing from MCYS is that non-profit operators and in particular, anchor non-profit operators like PAP Community Foundation (PCF) and NTUC First Campus are doing consumers a big favour by bringing the cost of childcare down.

Is this really true – that PCF and NTUC are operating as non-profit entities helping to bring down the cost of childcare services for Singaporeans?

TR Emeritus (TRE) went to talk to some private operators in the childcare industry to find out. Understandably, the private operators prefer to remain anonymous for fear of antagonizing the establishment.

Currently, a typical NTUC centre charges fee of about $642 per month for full-day childcare (fees range from $588 to $674 for void deck centres but most are at $642). It typically will have a MCYS-approved capacity of between 70 – 100 children depending on the size of the centre. Let’s take 80 children for illustration.

The revenue for this centre then works out to be 80 x $642 pm, which is over $51,000 a month. If one is to include some miscellaneous charges of about $3,000 per month on average, the total revenue of a typical NTUC childcare centre will be about $54,000 a month.

On the cost side, these so-called anchor “non-profit” operators get a special rate of $2,000 a month from HDB for renting its void deck. This is based on “non-profit” rentals of $2-$4 psm and a typical centre size of 500 sqm for the 80 children.

A centre with enrollment of 80 children would require around 12-15 staff based on MCYS recommended staff-to-student ratios at different age groups and the need for two shifts. That would translate to about $25,000-$30,000 per month in manpower cost (i.e, average of about $1,600-$2,500 per staff). Other costs such as food, materials and utilities will not exceed $10,000 per month.

A simple cash flow statement per month for such a typical centre would be as follows:

Per Month Amount Remarks

Monthly Cash Inflow

Fees $51,000 80 students x $642 monthly fees

Misc revenue $3,000 Registration and miscellaneous payments (estimated monthly avg.)

Total cash $54,000

Monthly Cash Outflow

Rental $2,000 $2-$4 psm x 500 sqm

Manpower $28,000 12 – 15 staff

Others $10,000 Utilities, food, materials (excluding depreciation)

Total cost $40,000

Surplus $14,000

Work out the simple mathematics and you can see an operating surplus of $10,000-$15,000 per month per centre. Multiple that more than 120 times, which is the number of centres NTUC currently owns, the majority of which are in low-rent sites enjoying special grants. That would give NTUC cash flow surplus of $14 to $22 million a year with an annual operating revenue of about $78 million for their childcare “business”.

The above mathematics has not factored in setup, furnishing, maintenance and recurrent manpower grants which anchor operators will get. MCYS has stated recurrent grants for anchor operators will run in $30 million a year.

Indeed, NTUC First Campus’ annual reports show that it has been profitable since incorporation in 1992. That’s an achievement even a for-profit operator will find hard to beat in this competitive business.

Its 2011’s net profit for the Co-operative and Group was $4.7 million and $1.7 million on the back of 32% increase in revenue to $84.3 million. Most of these would come from childcare operations and the rest mostly from SEEDS Institute, which trains preschool educators funded mostly with generous government subsidies.

But one has to ask, what happened to the estimated $14 to $22 million supposedly cash surplus a year compared to the announced group net profit of $1.7 million last year? Presumably, asset depreciation will account for some but it’s unlikely to be a lot since they get generous set-up and maintenance grants as an anchor non-profit operator. Talking to the private operators, all of them point to 1 thing. That is, a large chunk of their 120 centres’ operating surplus is probably used to pay for the high costs of maintaining their HQ which undoubtedly comprises of the many fat cats earning fat salaries inside the HQ. Indeed, their 2010 report shows a very high corporate administrative HQ cost of $23 million!

It is interesting to note that full financial details were given in 2009 and 2010 annual reports but are missing in 2011’s report. Hence, there are no financial details in 2011 report to see how much higher corporate administrative HQ cost may have gone up by.

The number of NTUC centres started to grow rapidly from 2010 with the Anchor Operator scheme. This is set to rise further as they will continue to get many more choice low-rental new sites from unannounced quota of child care centres by MCYS.

PCF does not publish its financial report online. Hence no analysis can be done. According to sources, PCF now has 90 childcare centres, up from just a few before the Anchor Operator scheme started. PCF started off well with fees lower than NTUC’s but the newest PCF centres have started to charge fees at about the same rate as NTUC ($600+).

NTUC and PCF may be kings of childcare here due to special privileges. However, when it comes to overseas operations, they fail miserably. NTUC’s premium brand is called Little Skool House International, which was set up in the 1990s. After so many years, the only international centre they had was in Hanoi, opened in 2009 to much fanfare. According to industry sources, that centre has ceased operations after just 1 year. It is not listed in NTUC First Campus’ website anymore. Perhaps they operate best only in Singapore with the so-called Anchor “non-profit” operating status to protect against competition.

Private and other non-profit childcare operators operating cheaper than PCF and NTUC

Now, what’s interesting is that one can actually find private and other non-profit childcare operators charging fees even lower than that of NTUC and PCF (i.e, $642 pm)! This is despite not getting recurrent grants and private operators having to pay higher competitive rents (currently at $10,000 a month but this is going to increase soon due to dwindling supply of the many void decks and places which have already been reserved for the expansion of the Anchor “non-profit” operators, NTUC and PCF).

The following are some of the monthly fees charged by private and other non-profit childcare operators:

• Non-Profit:

ABC Children’s Place in Tampines – $480
Chee Hwan Kog Child Care in Hougang – $470
SGM Little Kidz in Rivervale – $450

• Private:

Bearrington Childcare in Sengkang – $580
Early Learning Centre in CCK – $560
Bubblesland Playhouse in Sengkang – $630
Island Playhouse in Pasir Ris – $580

They can even operate at lower than NTUC’s and PCF’s fees of $642 despite not getting the type of advantages NTUC and PCF get as anchor operators!

Can you imagine what childcare costs might be like if we allow these operators access to the same grants and rent privileges as the Anchor Operators? Of course, once the private ones get to enjoy these privileges, MCYS would have the rights to regulate their fees.

Bottom line is, why should parents be paying $642 to “non-profit” anchor operators like PCF and NTUC if part of the fees go to feed the fat cats in their HQs? Parents would rather their fees go to pay for better teachers at the centres!

So, based on the cash flow statement of a typical NTUC centre above, if they are truly for non-profit purpose, they ought to be charging ($40,000/80) = $500 a month for childcare. And if other non-profit centres have their kind of privileges, it is estimated that they can easily knock off another $100 from their fees to around $400 pm). Wouldn’t Singaporeans be able to truly benefit with the lower charges?

And so, do we still think that the anchor operators are really non-profit entities and doing Singaporeans a favor?

Who’s doing who a favor?

Source: ... -entities/

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Re: Childcare Anchor Operators

Postby Dora1 » Thu Mar 07, 2013 7:19 pm

I have the same doubts long ago. Is NTUC Fairprice the cheapest supermarket cheapest around? Do they receive preferential rental?
Some PAP MP said in parliament yesterday that NTUC food fare keeps food price competitive. Really? Pls visit the food court at Clementi mall and you will know.
In the case of the anchor operators, since tax payers money are spent on subsidizing their operations, I think it's only fair that their books are opened to public scrutiny.

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Re: Childcare Anchor Operators

Postby insider » Thu Mar 07, 2013 9:09 pm

Dont know leh.

Feeling kind of extreme disappointment about all these left pocket right pocket thingy.

I don't mind about minimal social welfare.

But I cannot accept claiming huge subsidies when there seem to be actually minimal subsidies.

Where's the money that can actually be used for real social welfare?

How can the MIW make me feel like a fool?

This new Anchor Operator project is in the heat of movement. WP should be proactive to take a big share in it coz it is really GOOD money that they can make to support their social & political operations...(rough estimates: 1 centre x $20,000/mth profit x 12 months = $240,000 per year x 100 centres = $24,000,000 profit in total PER YEAR. WP can't be so blind cannot see this piece of 肥猪肉? Make me wonder what's stopping them?)

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Re: Childcare Anchor Operators

Postby sembgal » Sat Mar 09, 2013 11:51 pm

Hi Insider, based upon your calculation, I can tell you that anchor operators earn high profits. The rental is perhaps 1/10 of what you calculated. Insider info to share. Upset that parents have to pay so much and teachers earn so little. Guess where profits go? Recruiting advertisements perhaps. More and more teachers are leaving this line. The blur ones will enter and exit a few months or years later after experiencing burnout due to the demanding workload and unreasonable parents. The salary earned is unjustifiable to what the centre collect from parents. I'm not surprised if in future teachers are all imported in.

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Re: Childcare Anchor Operators

Postby Nebbermind » Sun Mar 10, 2013 9:36 am

We are the modern day slave; the child care employees get meagrely salaries, while the parents slave for their employers to pay off the child care bills....and the money goes to people who didn't even lift a finger in all the works. :shrug: :sad:

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Re: Childcare Anchor Operators

Postby meowal » Sun Mar 10, 2013 9:03 pm

Yea, this has been bothering me big time. As operators, we are being seen as the evil one by parents for increasing fees and by employees for not paying enough. Stuck between a rock & a hard place. Rent can just jump by $500 in a snap but increase fees get questioned by MSF over & over. Really squeezed flat. :(

It's very disheartening to be in this as all day long we worry abt losing teachers because we simply can't compete with the anchor operators for pay. Save the rent & we can bump up teachers salary by loads!

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Re: Childcare Anchor Operators

Postby david59 » Sun Mar 10, 2013 11:00 pm

Every year in January we take in K2 students in our student care centre from all types of childcare /kindergarten centres. Just wish to say that private ones produce students who r better prepared for primary one. Why? I thought because private ones charge higher fee, so got better quality teachers. From what I read here, doesn't seem to be the reason. Hmm...

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Re: Childcare Anchor Operators

Postby pirate » Sun Mar 10, 2013 11:07 pm

I believe the anchor operators scheme was originally devised to :censored:

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Re: Childcare Anchor Operators

Postby insider » Mon Mar 11, 2013 12:18 am

An average private conscientious operator will attempt to make a profit of $150 - $200 per child.

So, if the centre has a capacity of 50, the profit should be around the region of $7,500 to $10,000 per month - an amount which I feel that it's reasonable coz the operator gives up her job, throws in money for the investment to take risks, and then slogs with multiple problems.

If this private operator can have that kind of $1,000 rental (in fact only about $500 if the capacity is only 50) with subsidies in staff salaries, set up costs, etc, she just needs to charge about $350 - $450 per child to make that $7,500 to $10,000 quite comfortably.

One of my centres has rental of above $30,000 per month and my payroll is above $40,000 per month. With this kind of fixed cost and I still want to make a decent profit, how to tell me not to 'exploit' parents? Large part of fees are use to give the landlord and to feed the staff's families.

I am still not sure how the new anchor operators system will come up. I foresee it will not be a good sign coz these new anchor operators will really squeeze out most of the private operators with their cost advantage and yet not really benefiting the society in general. If they manage to open 100 centres but 70 - 80 private centres close, then the market net opening may be 20 - 30 centres (probably leaving the more premium brands around). In that case, really might as well nationalised all the preschools in Singapore.

My centres are good centres and I am not so worried about competition from anchor operators coz it's different 'league'. But those mid range ones that originally can serve some families may have to fold. Govt always says if you cannot compete, then too bad and have to 'consolidate'. But 鸡蛋 how to really 碰石头?

Honestly, I still cannot figure out this 'brilliant' idea of the govt on more additional anchor operators. Maybe I am just daft...

Feeling disillusioned. Probably just sell all my centres to those overseas big players and then take my money and retire. It's just not easy to do business in Singapore. If there's a mass market, then one may start to see the NTUC, etc, etc, coming in...

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Re: Childcare Anchor Operators

Postby meowal » Mon Mar 11, 2013 11:19 am

insider wrote:Feeling disillusioned. Probably just sell all my centres to those overseas big players and then take my money and retire. It's just not easy to do business in Singapore. If there's a mass market, then one may start to see the NTUC, etc, etc, coming in...

You know, this is my exact sentiments. But I will feel bad to my existing parents because they enrolled their children with us because of our promise. If I sell, then it is like breaking our promise to them. But if I don't let go, you may see me in the headlines - dropping dead in a childcare centre.

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