Sago pearls are made from the inner pith of the sago palm tree. The inner pith of the trunk is scraped out, pounded into fine particles and then soaked in water, which dissolves the starch from the fiber. The starchy water is strained through a sieve and dried. The starch that remains after the water evaporates is shaped into pearls. Sago pearls are similar to tapioca, and indeed they can often be used interchangeably, but tapioca is made from cassava root. Once sago pearls are cooked, they are used in desserts and drinks in Asia.
Bring the water to a boil in a large pot.
Add the sago pearls and reduce the heat to low. Simmer them for 15 minutes. Stir constantly at first, and then stir often to prevent the sago pearls from settling to the bottom where they easily burn.
Remove the pot from the heat. Cover the pot and allow the pearls to sit for 15 minutes or until they look translucent rather than starchy.
Rinse the pearls under running water in a sieve. Use your fingers to break up any clumps and to make sure all excess starch is rinsed away.
Spoon the sago into small molds or custard cups. Chill them in the refrigerator for at least an hour.
Combine the palm sugar and water in a medium saucepan. Bring the mixture to a boil and simmer until it thickens slightly. Add the pandan flavoring and stir to mix it well into the syrup.
Unmold the sago pearls into dessert bowls. Pour the palm sugar syrup and coconut milk over the pearls. Eat with a spoon.