Add shredded coconut to a dry pan over medium heat. Toast, stirring frequently, until it turns golden to medium brown.
Gently pour in water to deglaze the pan, be sure to scrap the bottom. Then add in both sugars and a pinch of salt stirring until the sugar dissolves. Bring the water to a gentle boil then reduce to a simmer for about 10 minutes.
Remove from the heat and allow the syrup to cool. Then strain into a measuring cup. Stir in the vanilla bean paste or extract and mix to combine. Carefully pour the strained syrup into a glass dispenser.