Rub the chicken with half of the curry powder and cayenne and all of the sugar. Set aside for 30 minutes to marinade while you prepare the other ingredients.
Heat oil in pan over medium. Fry the shallot, garlic and bay leaf for 30 seconds, then the rest of the curry powder and cayenne and cook for 1 minute, stirring. Add the chicken and lemon grass and fry for 5 minutes, stirring.
Add chicken broth, potato and carrot. Cover and simmer for 20 minutes.
Add onion, coconut milk and fish sauce. Cover and simmer for another 10 minutes.
Remove from heat and take out bay leafs and lemongrass stalks. Serve over rice or with crusty bread with soy sauce and sriracha with a garnish of cilantro and scallions.