Washy,
Your wife will not be issued with settlement route visa for UK entry clearance unless she has a pass certificate in the needed English Language Tests which must be submitted as part of the mandatory supporting documents bundle.
The new UKVI approved listing is here -
Approved Secure English Language Tests and Test Centres from 6th April 2015
Table 3 on page 3 of the above listing shows the testing centres around the world.
You'll find the Malaysia test centres on page 8