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Combine coconut and coconut milk in a large bowl. Cover and stand for 30 minutes.
Preheat oven to 340F. Line base and sides of a 7cm-deep, 10.5cm x 20.5cm (base) loaf pan with baking paper, allowing a 2cm overhang at both long ends.
Using a metal spoon, stir sugar, egg and vanilla into coconut mixture. Sift flour over coconut mixture. Gently stir until combined. Fold in raspberries.
Spoon mixture into prepared pan. Bake for 1 hour 10 minutes to 1 hour 15 minutes or until a skewer inserted into the centre comes out clean. Cool loaf in pan for 10 minutes. Lift onto a wire rack to cool completely. Dust with icing sugar and slice. Serve toasted, if desired.