I could reproduce thew issue with your shapefile data. I used ogr2ogr for converting the shapefiles into PostGIS tables and your query finds nothing.
Select * from state where ST_Contains(geom, (select geom from region where REGION_N='CAPITAL_REGION'));
Next I opened your shapefiles with OpenJUMP and made some tests. Both layers have some topology errors (ring self-intersections) which can make trouble for spatial functions but in this case I think that the issue comes from very little differences in the coordinates of corresponding vertices in those two shapefiles. Here is an example:
Layer: region
Feature ID: 50
[ 0:44] POINT (103.86042442121341 1.343437997354843)
[ 0:45] POINT (103.86043696024463 1.3434034315038)
Layer: State
Feature ID: 48
[ 7:0:45] POINT (103.86042442121337 1.3434379973548598)
[ 7:0:46] POINT (103.86043696024463 1.3434034315038228)
The coordinates differ in 12th coordinate place or so which is very very little but they still differ. When PostGIS is making computations I believe that it finds that some vertices of CAPITAL_REGION are outside the polygon of STATE_1 and therefore ST_Contains if "false".
What I do usually in cases like this is to reduce the accuracy of vertices first to some reasonable measure. Six or seven decimals could be a good start (see https://en.wikipedia.org/wiki/Decimal_degrees).
The main reason for the trouble is perhaps that vertices which have the same coordinates in ArcMap get written with slightly different values into "State" and "regions" shapefiles. Or perhaps ArcMap is handling internally coordinates with some tolerance but PostGIS is using the full accuracy in analysis.
ERROR: WKB structure does not match expected size! CONTEXT: SQL function "st_astext" statement 1
the same result i got using "ST_AsText" 2) The result polygon from ArcMap"MULTIPOLYGON (((103.82894961825984 1.240635969100187,103.82898942561337 1.240622224623671,103.82902854737875...... 1.240641704556595,103.82894961825984 1.240635969100187)),((103.82233409716753 1.247288081083784,103.82235533213685 1.2,1,STATE_1 "
Can't write whole result here since it's too long.POLYGON ((103.84924291873233 1.362752820720889,103.84935645049903 1.362682483934137,103.84973091592528 1.362406260504348,103.84992386166969...... 1.353352855081298,103.82898956487392 1.353407496501254,103.82883357311633 1.353461875646926,103.82867779071746,1,CAPITAL_REGION
shp2pgsql -I -s 4326 PATH_TO\state.shp state | psql -U postgres -d MyDatabase
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