The Chinese were generally hated in Southeast Asia and even East Asia because they were both the hotbed of Communism and a controller of a significant portion of each of the local economies. Removal of Chinese influence was the direct reason for South Korea's monetary reforms and the brutalisation of ethnic Chinese in Indonesia.
Well, the Thai Chinese seemed to do a lot better, largely because they've assimilated so much they're practically Thai anyway.
Not the case for Chinese in Malaysia and Singapore, sadly. UMNO was pretty uptight about the Chinese monopoly on their economy and they weren't seriously considering merger with a Chinese-majority island in the first place. What pushed them to accept Singapore was the 'balance' in demographics provided by Sarawak and Sabah's indigenous populations, which sufficiently qualified as Malay to them, as well as the danger of a Communist Singapore aiding the Malayan Communist Party's insurgency. Even then, they were very adamant against ceding more economic grounds to Singapore, and particularly the PAP government, which the Common Market and company licenses would have done had they followed through.
To work out the troubling race relations would have at minimum required the opposition Malaysian Malaysia alliance to oust the UMNO-led Alliance coalition, likely with Lee Kuan Yew as Prime Minister. Even then, winning over the Malays with the promise of prosperity under racial equality would take an awful lot, certain a lot more than what had been done in Singapore. Also, there would have been a lot more bloodletting in between.