The ex-President, however, said he is "reasonably sure or very sure" that the authorities in Pakistan did not know that the world`s most wanted man was living in Abbottabad.
In an interview to Karan Thapar in `Devil`s Advocate` programme of CNN-IBN, Musharraf also dismissed as "nonsense" reports that when he was the President, he was tipped off by former head of Afghanistan National Directorate of Security Amarullah Saleh that Laden was in Manshera near Abbottabad.
Asked about CIA chief Leon Pannetta`s comments that intelligence was not shared with Pakistan on Abbottabad raid because they could tip off Laden, Musharraf admitted that "if there is lack of trust, it is bad."
"In my time, till 2007-2008, I know that all operations conducted in Pakistan, intelligence sharing was there, moving on to the target. But each and everyone invariably was attacked by Pakistan law enforcement agencies. This is the first time that this has happened and I know that there is a lack of trust since the last, maybe, about a year," he said.
"Lack of trust will lead to lack of cooperation..
obviously, and it`ll have terrible effects on the fight against terror," he said.
Musharraf said there should be an inquiry by Pakistan into "incompetence and failure" in the Abbottabad episode.
"More than the world, Pakistan needs an explanation to itself that how did this incompetence and failure occur? I think we should answer that to ourself first and nobody has the right to start demanding (explanation) from Pakistan first," he said.
"...Investigate. Let the people know, let Pakistan know and let the world know because here accusations are certainly there that there was complicity. But I reject that theory, I reject it because of certain facts that President Obama has thanked our intelligence agencies, who facilitate leading to the target. So why has he thanked them?"
"I strongly believe that is incompetence and not complicity," Musharraf said.
The former ruler, who started the cooperation with the US in war on terror after 9/11, said there is "no need of American troops in Pakistan" and "they must leave".
"They shouldn`t have been there in any case...in my time, we had only cooperated on intelligence level. There were no troops in Pakistan and now if there are troops, they must not be there," he said.