AT CHILDCARE centre Little Mighty Me, director Ethan Lee is struggling with a high rent of almost $50,000 a month for the site above a multi-storey carpark in a Housing Board estate in Punggol.
The rent accounts for more than half of the centre's monthly operating costs of about $80,000.
Mr Lee, who charges $1,177 for the full-day childcare programme, tries to persuade parents deterred by the expensive fees to visit the centre and see the programmes for themselves.
"My wife and I went ahead with the high bid because we have our parents' financial support and we thought demand for childcare services in Punggol would be high," said Mr Lee, 36, who previously worked in his family's travel accessories trading business.
Only about half of the 95 places at the centre, which opened last September, are taken. Mr Lee needs 75 children to break even.
Private pre-school operators like Mr Lee said they welcome an impending move by the Early Childhood Development Agency to stop awarding HDB sites based solely on the highest bid.
Operators will now have to pay more attention to developing their curriculum and keeping fees affordable, as these factors will be taken into consideration when the sites are awarded.
But they said more could be done to rein in rents and keep fees affordable. One way, they suggested, is for the authorities to release more HDB sites to private operators.
Most sites are reserved for the two not-for-profit anchor operators, the PAP Community Foundation and the National Trades Union Congress' My First Skool.
Fewer than 10 such sites are released each year to private operators, say industry players.
Referring to the Early Childhood Development Agency's impending move, Dr T. Chandroo, chairman of the Association of Early Childhood and Training Services, said: "The plans are a move in the right direction. This is something that we've always been waiting for."
Due to the high rents, the operators have to charge very high fees, he added.
"They may be compelled to compromise in the aspect of hiring good teachers in order to sustain themselves, because good teachers need to be paid well," said Dr Chandroo, who is also chief executive of Modern Montessori International, which has about 10 centres in HDB estates.
Imposing other conditions when awarding bids may also help to keep fees in check.
Said Non-Constituency MP Yee Jenn Jong, who often raises pre-school issues:"Currently, the fee guidelines for private operators are too lax, and the authorities leave it to free-market forces.
"But if the sites are awarded based on other considerations, then the agency can impose some conditions to regulate the fees."
Some want more details on the changes, such as how the quality of programmes would be evaluated, and whether fees can be revised later if the operating costs were higher than expected.
Others were concerned that new operators may find it harder to secure sites. Said Mr Francis Ng, founder of childcare centre chain Carpe Diem: "Established brands tend to have their curriculum developed by their own experts, whereas smaller and newer market players may rely on their own teachers to do up the curriculum; so theirs may not be on a par with those of the established ones." About half of his 25 centres here are in HDB estates.
Some private operators have called on the authorities to release more HDB sites to private operators. Said Mr Yee: "If they release more sites for private operators, then there's more competition between the private sector and anchor operators, so there's more diversity in the industry."