Albeit with some deterioration in recent years, Malaysia has a state with high levels of capacity that has achieved sustained economic growth through a commitment to macroeconomic stability and other pro-business measures. Recent comparative historical work argues that this state capacity is an institutional legacy of a specific model of British colonisation. While Malaysia is an amalgam of areas formerly under direct and indirect rule; the former – a model of colonisation characterised by the construction of a legal-rational bureaucracy with extensive geographic reach – was more prevalent. Prior to the transition to independence, the British increased the “direct” nature of their rule by creating a powerful central government that brought the various territories together. And, a concerted transition of power to a cohort of “bureaucrats-turned-politicians” ensured that the new nation's leaders inherited an intact state apparatus. However, a disproportionate number of these senior bureaucrats hailed from Johor, a state formerly under indirect rule - a colonial model associated with small, neo-patrimonial states with limited capacity. By using colonial sources to map the contours and composition of the Malayan state under British and, subsequently, Japanese rule, this article will explore the reasons for this paradox.