The M40 group is defined as the middle-income 40% of the population with a household income of between RM3,860 and RM8,319.

Yesterday, Association of Registered Childcare Providers Malaysia (ARCPM) president Wong Poai Hong said private daycare centres for children had to raise their fees by 20-50% this year to stay afloat.

She said this was due to operating costs rising by 50-60% when the RM1,000 minimum wage became effective last July.

While conceding there is a rise in costs, Tan believed daycare centres catering to children of M40 would survive because they had a stable target market.

“We have our own market. As long as we do not target the lower-income families, we are okay.

“Families in the low-income bracket are tremendously affected by the rising cost of living. Once they are not able to pay the fees, they will opt out.

“Meanwhile, the rising cost of living will cause the high-income families to opt for daycare centres catering to the middle-income group,” Tan told FMT in an interview.

He explained that quality education was a priority for middle and high-income families and they would not settle for less.

“The parents will not send their kids to daycare centres in the low-income range because the teachers might not be experienced and the facilities not as good.”

Tan foresees many problems this year for daycare centres catering to low-income families.

“The children will stop going the moment the parents cannot afford the fees.

“These daycare centres will definitely see a drop in revenue. You can already see a lot of them closing down.”

Tan urged parents to “prioritise” and be “prudent in spending”. He advised parents – especially young parents – not to overspend and keep to a budget every month.

“I believe that with prudent spending, a family can be sustained on the average household income,” he said.