In a food processor, combine shallots, garlic, ginger, galangal, chili, salt, and water. Blend until it becomes a paste.
Lightly coat the beef with salt and pepper.
In a wok, heat the oil and cook the beef for 2-3 minutes in high heat. Set aside.
Add the paste to the wok and fry for 3-5 minutes. Return the beef to the wok.
Add lemongrass, lime leaves, bay leaves, nutmeg powder, and turmeric. Continue stirring for another 3-5 minutes.
Add coconut milk to the wok and continue stirring in high heat until the coconut milk breaks apart/separates. This is important to get the oil from coconut. Once it separates/simmer, turn the heat to low and cook for 3-4 hours covered. You need the steam to help the cooking process.