I read a blog about this:
How To Renew Your Malaysian Expired Driving License, which is aimed at locals, and asked around.
It seems that you can renew in a JPJ office – Jabatan Pengangkutan Jalan in Batu Uban – or at a post office.
If you go to the JPJ office they can take a photo for your licence on the spot, which is cost-free, and issue the licence with the new photo at the price of RM30 per year.
However, if you go to the post office to renew they issue you with another laminated card to use in tandem with your old licence that states the validity dates, but has no photo. Then you need to carry both cards.
Thus, to renew you take your old licence, passport and the licence fee.
If you do want to go to the JPJ office, it is a little hard to find. Use a GPS, Google Maps or whatever.