Add 1 cup water, panela pieces, cinnamon sticks and cloves to small saucepan over medium heat. Bring to boil, stirring until sugar dissolves, about 10 minutes. Remove and discard cinnamon sticks; set aside.
Meanwhile, in small bowl, mix together 1 cup milk and cornstarch, stirring until smooth; set aside.
Add remaining 4 cups milk and salt to medium saucepot over medium heat. Heat milk until warm (but not boiling). Pour panela mixture into milk, stirring to combine. Increase heat to medium-high. Using whisk, immediately whisk cornstarch mixture into panela mixture. Cook, whisking constantly and scraping bottoms and sides of pan with whisk, until mixture comes to a boil and is smooth and thick.
Pour natilla into 8” glass baking dish sprinkled with grated coconut, if desired; cover with plastic wrap. Refrigerate until cold and firm, at least 4 hours, or up to 48 hours.
To serve, run thin knife around edges of dish. Invert natilla onto serving plate. Sprinkle with ground cinnamon, if desired. Cut into 12 pieces.