Cream the butter and sugar: In a large bowl, beat softened butter and sugar with a hand mixer for 2–3 minutes until light and fluffy.
Mix in wet ingredients: Add sweetened condensed milk, vanilla extract, and a pinch of salt. Stir until smooth.
Combine dry ingredients: In a separate bowl, whisk flour and baking powder. Gradually mix into the wet ingredients, then fold in shredded coconut.
Chill the dough: Cover and refrigerate for 30 minutes to enhance flavor and prevent spreading.
Shape and bake: Preheat oven to 350°F (175°C). Roll tablespoon-sized dough balls, coat with extra coconut, and place on a parchment-lined baking sheet. Bake for 12–15 minutes until edges are golden.
Cool the biscuits: Let rest on the baking sheet for 5 minutes, then transfer to a wire rack to cool completely.
Add glaze (optional): Whisk powdered sugar, milk, and coconut extract until smooth. Drizzle over cooled biscuits for extra sweetness.