It appears that JPJ has updated their website and has removed the ability of converting driver's licenses from countries other than the ones that have a two-way agreement with Malaysia. Those countries include:
Australia Iraq Papua New Guinea Belgium Italy France Holland Japan Poland
Brunei German Russia China Korea Spain Denmark Laos Singapore
Fiji Libya Switzerland Philippines Mauritius Thailand Finland Egypt Turkey
Hong Kong New Zealand Taiwan Iran Nigeria
Notice the USA and UK are not on the list. However, they allow people to continue to drive on their home license as long as it's still valid. My guess is that's the new ruling, although I have not seen an official announcement. I posted a while back about my friend that kept rejecting his license conversion and they kept making up reasons to reject it, now it appears that JPJ was simply stalling until the new rules were in place. The current director made up his mind to not convert licenses from any country that didn't convert Malaysian licenses, and they were going to reject anyone for whatever reason they could come up with until the rules were in place.
Actually further digging on the side shows it's still there, but hidden under several layers.
The site that's upfront Acceptance of Foreign Drivers' License does not mention the old category B.
However upon digging into the site further I found an article titled "Application to Convert a Foreign Driving License into a Malaysian Driving License by Exemption of Rule 5(3) of the Rules of Motor Vehicles (Driving Licences) 1992 (Non-Automatic)." Link to article that gives the procedure. However I had to dig for for the information, it's not real easy to find.