Neat cover for Indonesian island’s ethnicity (9)
I believe the answer is:
tribalism
'ethnicity' is the definition.
'neat cover for indonesian island's' is the wordplay.
'neat' becomes 'trim' (synonyms).
'cover for' means one lot of letters goes inside another.
'indonesian island's' becomes 'Bali's' (island of Indonesia).
'trim' going around 'balis' is 'TRIBALISM'.
(Other definitions for tribalism that I've seen before include "clan system" , "Clannishness" , "Organisation of society on ethnic lines" , "ethnic customs" , "divisive tendency" .)