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.

"Penang does not need to be a federal territory to be a tax haven.

"Penang enjoys free port status, and even Iskandar (Development) in Johor enjoys tax haven status, without being turned into a federal territory," Lim, who is also DAP secretary-general, said in a statement today.

“Lest BN forgot, it was BN that sold out the rights of Penang in the 1970s by abolishing the state's free port status,” he pointed out.

“BN can return us the free port or grant us the tax haven status without turning Penang into a federal territory. Why has it not done so till now?” Lim asked.

The chief minister said Zainal's defence of Tengku Adnan was a clear indication that if BN wins Penang in the next general election, Umno would push for the state to be turned into a federal territory. 

“That is why Penang needs to be saved from BN and Umno".

Lim then stressed the importance for Penangites to resist BN's proposal by participating in the "I Love Penang" campaign, which he said would secure the state's future as a sovereign land under the Federal Constitution.

Lim also dismissed claims that the state administration was "overreacting" to Tengku Adnan's proposal.

"We see it as a clear and present danger to the continued existence of Penang.

"Worse, Zainal says the proposal was to turn the island into a federal territory, leaving the mainland untouched. This would split up the state."

By backing up the federalisation idea, it showed that BN leaders do not have the best interests of Penang at heart, Lim said. 

"They are willing to give up everything for the perks and privileges of office".