Rinse the rice under cold water until the water runs clear.
Combine the rinsed rice, coconut milk, water, salt, and sugar (if using) in a medium saucepan.
Bring the mixture to a boil over medium-high heat.
Once boiling, reduce the heat to low, cover the saucepan tightly, and simmer for 15-20 minutes, or until all the liquid is absorbed and the rice is tender.
Remove the saucepan from the heat and let it sit, covered, for another 5-10 minutes.
Fluff the rice gently with a fork.
Garnish with shredded coconut if desired and serve hot.
Notes
For extra flavor, you can add a pandan leaf or a stick of cinnamon to the pot while cooking.
Adjust the amount of salt and sugar to your taste.