The former Pakistan Army chief said this while addressing the newly-elected office bearers of his party, the All Pakistan Muslim League (APML), The Express Tribune reported from Dubai.
Musharraf, 74, is the chairman of APML, a political party he formed in 2010.
He had left the country for Dubai in March last year after the interior ministry issued a notification to remove his name from the exit control list (ECL).
His comments came as the ruling Pakistan Muslim League- Nawaz (PML-N) led by ousted prime minister Nawaz Sharif is facing the heat over corruption and money laundering charges by the Sharif family. An anti-corruption court today issued a bailable arrest warrant against Sharif for not appearing before it after he was indicted in three graft cases.
Musharraf said Pakistani politics revolved around ethnic, racial and lingual basis, which was damaging for national interests.
"We, on the other hand, want to establish APML on national level across the country, representing every Pakistan," he said.
"One, to dissolve the incumbent government and announce fresh elections second, to form a national government and third to impose a martial law that is neither imminent nor possible in this entire situation," he was quoted as saying.
Gen Musharraf advocated for the second scenario of forming a national government, saying it was feasible in the current scenario but without involving "the present lot of political parties" as it will give no benefit to the country.
Commenting on Karachis political situation, the APML chief proposed forming a political alliance to fill a greater political vacuum.
"Karachi is the best place for such an alliance as the biggest metropolitan houses Pakistanis from every nook and corner of the country," he said.
"We will form a political alliance in Karachi that will be above from all kinds of lingual, ethnic and racial discrimination," he claimed.
Musharraf is facing treason charges in Pakistan for imposing emergency rule in November 2007, arresting judges and limiting their powers.
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