One of the largest reasons for Malaysia kicking out Singapore was the demographics of the city. Singapore of the time (and even now) was majority Chinese, making up around 70% of the city's population of 2 million. Malaysia at the time, having just recently been released by the British had to forge a new national identity, the way the mainland chose to do this was the establishment of a Malay-centered state, prioritising the ethnic Malay over other groups.
Thus, Singapore's predominately Chinese population proved to be an issue to integrate into a Malay Malaysia, and they were kicked out. This forced LKY (Lee Kuan Yew) to have a race against time to establish Singapore's economy as an independent country before the British Army eventually pulled out in 1971. The British Army made up some 20% of Singapore's gross national product at the time, and also helped deter Malaysian military intervention (invasion from Malaysia was a serious concern for LKY at the time). Cut off form the natural resources of Malaysia and also the infrastructure on the mainland, LKY completely rebuilt Singaporean society to the modern state and global-hub it is today with a mixture of human tenacity, good planning, and a good dose of luck.
If you remove Singapore's separation from Malaysia, you need to drastically change the attitudes of leaders on both sides. This might include throwing away the concept of a Malay Malaysia, LKY begging to reintegrate to the mainland after nation-building failure, or even changing the role of Singapore entirely (which was the center of British control in SEA (South East Asia)).
By choosing any of these options, you change the course of Malaysia and Singapore dramatically. By default, Singapore is almost guaranteed to be a worse condition than it is today and also likely be less developed in all sectors. On the other-hand, Malaysia has regained an important sea port and former British military base, which may prove beneficial to their economy.
Sabah and Sarawak had already joined the federation by this time, so Singapore staying effects them little, at least in the long term.