Preheat oven to 300F/150°C and line two baking sheets with parchment paper or silicone mats.
In a large bowl, cream together butter with confectioners' sugar until well combined.
Add egg yolk, vanilla extract, and grated cheddar cheese into the butter mixture and mix until well combined.
Sift in the all-purpose flour, cornstarch, milk powder, and salt into the mixture and mix with a spatula until well incorporated.
Pour the palm sugar into a bowl. Scoop out 1 1/2 teaspoons of dough and roll into balls, then roll into the sugar. If the dough is too dry to roll into the sugar (the sugar does not stick to the dough properly), try adding 1-2 tbsp of milk to the dough.
Arrange the balls in the prepared baking sheets.
Bake for 25-30 minutes. When the cookies are done, transfer them to a cooling rack to cool completely.
Notes
Make sure to measure the flour correctly if using volume measurement. The cookies will end up too dry if you add too much flour. Use a spoon to scoop the flour into the measuring cup. Then, level the top with a knife or other straight-edged utensil.