This research examines how political connections and agency costs affects investment efficiency. This research also examines how agency costs moderates the relationship between political connections and investment efficiency. Political connections is being measured on the boards (commissioners & directors) level. Agency costs is calculated by using expense ratio which refers to selling, general, and administrative (SGA) expense scaled by total sales. Based on sample from the firms listed on Indonesia Stock Exchange (IDX) during 2014 - 2015, this study uses 542 observations. The results suggest that political connections has negative impact on investment efficiency. In other words, investment efficiency for politically connected firms is lower than non-politically connected firms. This study also finds that agency costs can significantly moderates the impact of political connections to investment efficiency. The existence of agency costs in politically connected firms can strengthen the negative impacts of political connections to investment efficiency.