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In a small skillet over medium, toast the coconut, stirring frequently, until light golden brown, 2 to 3 minutes. Transfer to a small bowl and set aside.
In a blender, combine half of the sliced chilies, the garlic, lime juice, fish sauce and sugar. Blend until smooth, about 1 minute. Transfer to a large bowl, add the shallots and chicken and let stand for 10 minutes.
Add the cabbage and toss with your hands to combine, gently rubbing the dressing into the shreds. Add the remaining sliced chilies, the cashews and coconut, then toss. Add the basil and cilantro and gently toss again.