Hello Stanley Tsang,
Welcome to microsoft Q&A, Thankyou for providing your query here.
Please check if Istio is installed properly.
Issue may be related to the Azure service mesh or other webhook configurations that modify or override settings.
https://istio.io/latest/docs/ops/configuration/mesh/webhook/
if the issue still exist, try to directly set the Envoy access log configuration. You can edit the Istio Operator deployment to include the necessary Envoy logging configuration.
you can also refer this links if any of them help you.
https://learn.microsoft.com/en-us/azure/aks/istio-deploy-addon
https://learn.microsoft.com/en-us/azure/aks/istio-meshconfig
Hope this helps you