In a dry pan, toast coconut over medium-low heat, stirring until lightly browned and fragrant. About 4-5 minutes. Transfer to a plate to cool.
In a medium saucepan, combine all other ingredients including rice, coconut milk, water, sugar, and salt. Bring to a boil over high heat, stirring occasionally. Reduce heat to a barely bubbling simmer, cover, and simmer until rice is fully cooked and liquid absorbed. About 20 minutes. There may be a bubbly top layer of coconut cream; poke with a fork to make sure rice is cooked. Remove from heat and fluff with a fork. Then, re-cover the saucepan and let stand for 5 minutes.
Transfer to a serving bowl and top with toasted coconut.