Begin by toasting the dried chilies for about 4 minutes in a dry skillet or wok over medium heat until they become fragrant and slightly darkened. Remove them from the skillet and set them aside.
In the same skillet, add the thinly sliced shallots or red onions and garlic (without oil) and stir for about 4 minutes until they are softened and lightly charred brown. Remove them from the skillet and set aside.
In a food processor or blender blend the toasted dried chilies until they turn into fine flakes or a powder. If you prefer a milder spice level, remove the seeds before blending.
Add the cooked shallots and garlic to the food processor or blender. Blend until you have a smooth paste.
Transfer the chili paste back to the skillet and add the remaining oil. Cook over low to medium heat for about 12-15 minutes, stirring occasionally until the paste turns fragrant and the oil starts to separate.
Add tamarind concentrate, palm sugar (or coconut sugar, or brown sugar), vegetarian fish sauce, and salt to the skillet. Cook for an additional 3 minutes, stirring, until the sugar dissolves and the mixture thickens.
Allow your Nam Prik Pao to cool, then transfer it to a glass jar or airtight container. Store it in the refrigerator for up to a month, or portion it in an ice cube tray to freeze for long-term storage.