
If using annatto seeds, place them in a small heatproof bowl. Heat the oil until hot and then pour it over the seeds. The oil will turn to a reddish color. Let it cool and discard the seeds.
Slice beef into large chunks, about 1½ inch thick and 2 inch wide. Place beef cubes in a large mixing bowl, then toss with the five spice powder, turmeric powder, ground coriander, paprika powder, salt, and pepper. Drizzle 1½ tablespoons of the annatto seed oil over the meat and mix well. Set aside for 15-30 minutes.
Heat a heavy-bottomed pot over medium heat and add the remaining ½ tablespoon annatto seed oil. Add bruised lemongrass stalks, shallots, garlic, star anises and bay leaves. Stir and sauté briefly until fragrant, about 30-45 seconds.
Slightly increase the heat and add beef to the pot. Continue to stir and cook until the exterior of the meat is browned. This step may take 3-4 minutes.
Add soy sauce, fish sauce and sugar. Continue to stir and cook the beef for another minute.
Add 5 cups (1.2l) water to the pot and bring it to a rapid simmer. Skim off excess foam, and then lower the heat to maintain a gentle simmer. Cover the pot and cook for about 1 hour 30 minutes to 1 hour 45 minutes.
Check if the beef is almost tender to your liking. Then add carrots and simmer for 10-15 minutes until both the meat and carrots are tender. Taste and adjust seasonings to your liking. Discard all the lemongrass, star anises, bay leaves, garlic and shallots.
Dissolve cornstarch into 2½ tablespoons water and then slowly pour it into the pot while stirring to thicken the stew. This is not a thick stew so don't overdo with the slurry.
To serve with bread: divide the beef stew into serving bowls. Top with some thin onion slices and sprinkle with chopped scallion and cilantro. Serve with banh mi (or regular baguettes), Thai basil, sawtooth leaves, bird's eye chili and lime wedges on the side.
To serve with noodles: cook rice noodles or egg noodles according to package instructions. Place the noodles in serving bowls, and top with some thin onion slices and sprinkle with chopped scallion and cilantro. Then ladle the beef stew into the bowls. Serve with Thai basil, sawtooth leaves, bird's eye chili and lime wedges on the side.