Blend chili, onion, garlic, turmeric, galangal, ginger, belacan, and candlenut in a food processor with a little water.
Heat a wok with some oil and fry spice mixture for about 15 minutes until oil separates.
Chop off the top of the lemongrass and bash its root lightly. Add to wok together with palm sugar, assam water, and kaffir lime leave, and a little chicken stock (enough to make it saucy but not soupy). Stir to mix well and taste for a balance of sweet, sour, and salty.
Once you’re happy with your seasonings, add chicken. Bring liquid to a light simmer and then cover and cook for about 7 to 10 minutes.
Once chicken is almost cooked, add coconut milk and cook uncovered for another 2 to 3 minutes to cook through the raw coconut milk. Be careful not let the coconut milk separate.
Serve with a garnish of fried shallots and chopped coriander leaves.