Penang Chief Minister Lim Guan Eng has slammed the state Umno chief's defence of the proposal to federalise Penang, in order to turn it into a tax haven.

This is in response to Penang Umno chief Zainal Abidin Osman's statement yesterday that the proposal by Federal Territories Minister Tengku Adnan Tengku Mansor was probably to turn the state into a tax haven.

Zainal had also welcomed Tengku Adnan's views, saying the latter had only good intentions towards Penang.

Lim said Zainal's remark was dishonest, as Tengku Adnan had never mentioned the matter before.