The city was once the capital of the ancient, Buddhist kingdom of Srivijaya that controlled a large part of what is now Malaysia and Indonesia. Following a 1025 raid by the Chola Empire (In the period of Emperor Rajendra Chola I) of southern India it began to gradually decline in importance. Srivijaya's capital eventually moved northward to Jambi. Palembang is also the origin of Parameswara, founder of the Malacca Sultanate.
Palembang's economy has been developed significantly since it became a host for a National Sporting Event in 2004. The city government has set a revenue target of IDR 3.5 billion from advertising alone.. Palembang is also one of hosts of the 2007 AFC Asian Cup.
This city is famous in Indonesia for its "Pempek" fish cakes.