Preheat oven to 350°F. Line an 8" square baking pan with parchment paper and set aside.
In a medium bowl, whisk the flour, baking powder, and salt together. Set aside.
Using a hand mixer or a stand mixer fitted with the paddle attachment, cream the butter with the sugar until smooth. Add the sweetened condensed milk and beat to combine. Add the dry ingredients to the wet ingredients and mix on low speed until dough forms.
Press the dough into the bottom of the prepared pan and bake for 14-16 minutes, until the edges are slightly browned. Cool completely before removing from the pan and adding topping.
To make the topping:
Start by making the caramel sauce. Add the sugar to a medium saucepan, spreading to form an even layer. Add the water evenly over the sugar.
Place the pan on medium heat and allow mixture to come to a boil. Cook for another 8-10 minutes, until mixture turns to an amber color.
Remove from heat and immediately mix in the half and half and butter. Stir until smooth, then set aside to cool completely.
Once the caramel sauce has cooled, stir in the shredded coconut and chocolate chips. Spread topping evenly over cooled cookie base before slicing into bars.
The caramel sauce may start to sizzle and seize once you add in the cold half and half. This is completely normal, just carefully stir it all up.