I think you will get a faster answer posting this question at /r/singapore :)

There's also a /r/malaysia if you want to hear both sides of this occasion!

To put it very simply Singapore and the dominant party there, the PAP were causing problems with the rest of the Malaysian Federation by advocating equal treatment for all races. The PAP and Singapore at the time were predominantly Chinese. There was a lot of tension between both the Chinese and Malaysians at this time. This can be seen in the 1964 race riots between the Chinese and Malaysians a year after Singapore gained its independence. Essentially Singapore was kicked out to make Malaysia more stable politically and to get rid of a lot of the Chinese-Malay tension as the Chinese with Singapore's departure were no longer a political threat.

Keep in mind Singapore at the time was not the successful city it is today.

A popular history of Malaysia and Singapore by Jim Baker