Rinse the rice under cold water until the water runs mostly clear.
In a medium saucepan (with a tight fitting lid), combine the rice, coconut milk, water, sugar (if using), and salt.
Bring to a gentle boil over medium heat.
Once boiling, reduce heat to low, cover, and simmer for 15-18 minutes, or until the liquid is absorbed.
Remove from heat and let the rice sit, covered, for 10 minutes.
Fluff with a fork, garnish with toasted coconut, and serve.