Holding the squid firmly, pull the head from the body including internal parts and tentacles. Pull out the clear cartilage inside the tube and discard.
Under cold running water, wash the inside and out to remove any debris or excess ink. Drain well and pat dry.
In a pot over medium heat, combine squid, 2 cloves of the garlic, vinegar, water, and the bay leaf. Bring to a boil, uncovered and without stirring, for about 3 to 5 minutes or just until squid changes color. Remove from heat and drain, reserving about 1 cup of the liquid.
In a pot over medium heat, heat oil. Add onions, ginger, the remaining 1/2 of the garlic. Cook until softened.
Add tomatoes and cook, mashing with the back of a spoon, until softened.
Add fish sauce and cook for about 1 minute.
Add coconut milk, reserved liquid, and chili peppers. Bring to a simmer and continue cook until liquid is reduced and begins to render fat.
Add squid and cook for about 3 to 5 minutes or until heated through.
Season with salt and pepper to taste. Serve hot.