Heat the coconut in a dry wok, stirring continuously until golden brown. Set aside to cool.
Using a blender or a food processor, blend the shallots, garlic, chillies, ginger and lemon grass to a thick paste.
Grind the coriander, fennel, cumin and nutmeg together in a mortar and pestle or coffee grinder.
Using the wok, fry the shallot paste in a little oil for a few minutes, until fragrant. Add the ground spices and cook for 3 to 4 minutes, stirring continuously. Add beef and cook over a medium heat for a further 3 to 4 minutes, stirring, until meat is browned all over.
Stir in sugar, coconut, cloves, cinnamon stick, coconut milk and water. Bring to a boil, reduce heat and simmer until most of the liquid has evaporated and the meat is tender, about 1 hour. Season to taste with salt.
Just so you know. The beef rendang is originally Indonesian cuisine for centuries but these past few years, malaysia has been trying to claim it as their cuisine. They need to be more creative with their cuisine and it is not fair for Indonesia: to have their best cuisines being claimed by another country like malaysia. Such a shame! - 04 Oct 2012