Add all the spice paste ingredients into a food processor and blend to a fine paste.
In a wok, heat up the oil. Then add in the blended spice paste and sauté for about 30 seconds. Then add in half of the quartered kaffir lime leaves, and sauté the spice paste for another 2-3 minutes until aromatic.
Add in the chicken pieces and stir-fry for one minute, ensuring each chicken piece is well coated with the spice paste. Pour water in and bring it up to a boil.
Then add in the rest of the quartered kaffir lime leaves, and lower the heat to medium-low.
Stir and continue cooking the chicken for about 20-25 minutes until the chicken is tender and gravy thickens. If the gravy gets too dry while cooking, you can add in a bit more water.
Season with salt and sugar, and swirl in the coconut milk. Turn fire off when well combined.
Dish out and garnish with whole kaffir lime leaves or shredded lime leaves (the shredded kaffir lime leaves can be eaten). Squeeze in some lime juice and serve hot with steamed rice, roti canai (Malaysian flatbread), roti jala (Malaysian net bread), or a baguette.