Childcare centers close in Malaysia despite demand

The number of registered childcare centers fell last year despite growing demand, as operators struggled with rising costs, staffing woes and red tape.

Figures from the Department of Statistics Malaysia show an 11 percent drop in Malaysian capital Kuala Lumpur in 2024 compared to the year before, from 218 to 193.

Cities Putrajaya and Perak both declined by 21 percent, with Putrajaya falling from 62 to 49, while Perak dropped from 245 to 194.

Despite fewer childcare centers in these three locations, enrollment grew by 8 percent in Kuala Lumpur, 10 percent in Putrajaya, and 33 percent in Perak, reflecting rising demand.

Other regions, including Negeri Sembilan, Penang, Sabah, Melaka and Labuan also saw a drop in the number of childcare centers, but enrollment also fell in these places.

Nationwide, the total number of registered childcare centers rose by 1.3 percent to 3,198 in 2024, according to the Department of Statistics Malaysia's Children's Statistics Malaysia 2025 report.

There are currently 2.3 million children aged four and below in Malaysia, and industry players estimate the country needs at least 40,000 to 50,000 childcare centers.

Association of Registered Childcare Providers Malaysia President Norsheila Abdullah said the past few years saw about 10 percent of registered child centers in Kuala Lumpur, Putrajaya and Perak shutting down.

She said the trend of closures signals increasing strain faced by operators.

Many are barely able to cope with steep hikes in rent, utility and food prices, as well as stricter safety and health compliance standards.

These factors have made it difficult especially for smaller centers to remain financially sustainable.

Norsheila said many community or workplace-based centers are outsourced to private operators, who must pay high rents imposed by departments and ministries.

"This places a huge burden on private operators, who are expected to charge low monthly fees while meeting minimum wage requirements for childcare providers," she said.

Norsheila said strict licensing and safety regulations under the Social Welfare Department are important, but noted that smaller centers are struggling with the administrative burden and cost of compliance.

She said streamlining state and federal regulations and introducing shared inspection systems could help maintain quality without overwhelming operators.

She warned that the widening gap between childcare demand and available supply may drive up the fees.

This could limit access for middle and lower-income families, pushing some parents toward informal or unregistered childcare options that lack proper safety standards.

Norsheila called for stronger collaboration between state and federal governments to encourage the setting up of community-based and workplace childcare centers, supported by tax reliefs, rental subsidies and the use of underutilized public buildings.

She also proposed introducing minimum wage standards for childcare educators, tied to their qualifications.

In addition, she suggested expanding training through technical and vocational education and training institutions and universities, and scaling up fee assistance or childcare voucher schemes for B40 and M40 families (Malaysian household income categorization, meaning Bottom 40 percent and Middle 40 percent).

Norsheila said digital and administrative reforms, such as an integrated childcare database and a simplified online licensing system under Department of Social Welfare, could further ease operations.

Siti Ruzita Ramli, an early childhood consultancy expert, said operational costs and a shortage of qualified educators are straining childcare center operators.

She said currently many centers struggle to maintain quality while managing higher expenses for rent, increments for the monthly salary which is now at 1,800 Malaysian ringgit ($436), food, and learning materials.

Low pay

Siti Ruzita said it has become increasingly difficult to retain passionate teachers due to heavy workload and low pay.

"Universities can play a role by providing work-and-learn opportunities based on the 'place and train' concept, helping to reduce the high wage burden for employees," she said.

Penang Preschool Teachers Association President Sally Ng Chit Peng said rising living costs have worsened the situation for childcare operators in the state.

"The cost of living in Penang has increased significantly, with higher expenses for rent, utilities, food, and wages," she said.

Ng said the shortage of caregivers also remains a major concern, as low salaries and limited career progression make it difficult to attract and retain staff.

She also called for greater flexibility in licensing to help operators manage costs. "Allow one building to operate both a childcare center and a preschool under dual licences. … A dual licence setup saves space, reduces operating costs," she said. Ng noted that, under current regulations, the two must operate separately.

The Star, Malaysia